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Emily would like to buy a house that is currently on the market at $175,000, but cannot afford it right now. However, she thinks that she would be able to buy it after 3 years. If the expected inflation
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Emily would like to buy a house that is currently on the market at $175,000, but cannot afford it right now. However, she thinks that she would be able to buy it after 3 years. If the expected inflation rate as applied to the price of this house is 5% per year, what is its expected price after three years?

User Raminr
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4.6k points

1 Answer

3 votes

Answer:

The expected price after 3 years is $202584.38

Step-by-step explanation:

Future Value = Cashflow * (1+i)^n

FV= 175000* (1.05)^3

FV = $202584.38

User Antionette
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4.0k points
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