Question

the formula S=C(1 +r)^t models inflation, where C= the value body, r= the annual inflation rate (in decimal form), and S = the inflated value t years from now. if the inflation rate is 3%, how much will a house now worth $163,000 be worth in 15 years? round your answer to the nearest dollar

Answer 1

Since the actual value happens at t=0, then:

`\begin{gathered} 163,000=C(1+0.03)^0 \\ \Rightarrow C=163,000 \end{gathered}`

Evaluate S(t) at t=15, with C=163,000 and r=0.03 to find the inflated value of the house 15 years later:

`S(15)=163,000\cdot(1.03)^(15)`

Use a calculator to find a decimal expression for S(15):

`S(15)=253,948.6889\ldots`

To the nearest dollar, the house will be worth $253,949