posted by James .
The Estradas are planning to buy a house 5 years from now. Housing experts in their area have estimated that the cost of a home will increase at a rate of 3%/year during that 5-year period. If this economic prediction holds true, how much can the Estradas expect to pay for a house that currently costs $500,000? (Round your answer the the nearest dollar.)
Are they paying in cash?
The cost in dollars in five years will be 500,000(1.03)^5
But the real cost is dependent on the inflation rate (ie,how much less is a dollar worth in 5years, how much income will increase), and then, what will be the interest rates available in 5 years..Few folks pay cash for houses.
Paying in cash. Thank you!
Doing homework with James, thanks!