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The average home price in a certain area was $272,000 in 2010. In 2020, the average home price was $299,000. What is the rate of inflation? Round to one decimal place​

1 Answer

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Answer: 0.95%

Explanation:

Use the future value formula to calculate this with inflation as the rate by which the amount is increasing.

Future value = Amount * ( 1 + r) ^ no. of periods

299,000 = 272,000 * ( 1 + r) ¹⁰

( 1 + r) ¹⁰ = 299,000 / 272,000

( 1 + r) ¹⁰ = 1.099

1 + r = ¹⁰√1.099

r = 1.009484 - 1

r = 0.95%

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