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math

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I can not solve this problem it's kind of hard for me can anyone please help me out. Thanks

1.If inflation is 6% a year compounded annually, what will it cost in 21 years to buy a house currently valued at $230,000? Round to the nearest cent.

  • math -

    Use the equation A = Pe^(rt), where A is the final value, P is the initial value, r is the rate, and t is time.

    The time is 21 years, the rate is .06% per year, and the initial value is $230,000.

    Therefore, we have
    A = 230,000*e^(.06*21)
    A = $810,846.94

  • math -

    I don't know...That doesn't look correct. I got this:

    A = 230,000*e^(.06*21)
    = 289,800
    NOW we add that to the 230,000 to get

    A = 519,800???? I think this makes more sense? Any thoughts? ThankS! :)

  • math -

    230,000*e^(.06*21) does not equal 289,800. You forgot about the e.

  • math -

    Well you see that is what I did and but still don't come up with the answer these are my answer options.

    A)$427,867.75
    B)$737,641.16
    C)$828,813.61
    D)$781,899.63
    I even did this since there are 12mths in a year I mult. 12 by 21 which I got 252. So what is the answer though????

  • math -

    Just use the compound interest formula,
    Amount = princ(1+i)^n

    amount = 230000(1.06)^21
    = 781899.63

  • math -

    Marth's formula is used for "continuous" rate of interest.

  • math -

    So what you did was mult. 230,000 by 1.06 right which I got 368000. But from there what do I do did you mult. 368000 by 21? I'm lost in that step right there.

  • math -

    no,
    follow the order of operation, the power has to be done first

    do (1.06)^21 on your calculator to get
    3.3995636 , then multiply by 230000

  • math -

    Yeah I already figured it out thank you. I was wondering how you did it solved the problem I was getting fusterated b/c I tried it so many ways and I just wouldn't come up with an answer, I was way off the mult. choice. Once again thanks.

  • math -

    1. Find the amount of time to the nearest day that it would take for a deposit of $1000 to grow to $500,000 at 10% compounded continuously. The equation for continuous compounding is given below:

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