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: