Rent was $350 for 17 years. Based on 4% inflation, how much would the rent be at year 17?
To calculate the future rent after 17 years with a 4% rate of inflation, you can use the formula:
Future Value = Present Value * (1 + inflation rate) ^ number of years
In this case, the present value (rent) is $350, the inflation rate is 4% (or 0.04), and the number of years is 17.
Let's plug these values into the formula to calculate the future rent:
Future Value = $350 * (1 + 0.04) ^ 17
To solve this equation step by step, follow these instructions:
1. Add 1 to the inflation rate: 1 + 0.04 = 1.04
2. Raise the result to the power of the number of years: 1.04 ^ 17 = 1.8361747 (approx.)
3. Multiply the present value by the result: $350 * 1.8361747 = $641.65 (approx.)
Therefore, the estimated rent after 17 years with a 4% inflation rate would be approximately $641.65.