Problema Solution
If the average new home costs $275,000 today, how much will it cost in 10 years if the price increases by 5 percent each year?
Answer provided by our tutors
today's cost: 275,000
after 1 year: 275,000 + 0.05*$275,000 = $275,000(1 + 0.05)
after 2 years: 275,000(1 + 0.05) + 0.05*$275,000(1 + 0.05) = $275,000(1 + 0.05)^2
after 3 years: $275,000(1 + 0.05)^3
.........
after 10 years: 275,000(1 + 0.05)^10
275,000(1 + 0.05)^10 = $447,976.02
after 10 years the cost of the house will be $447,976.02