A house cost $85,000. The price of the house will raise 5% each year. If the price actually rise at that rate, what will the price, P, of the house equal in y years.
a. Make a table for 5 years
B. Explain how you calculated the price
c. What number do you need to use if you want to multiply the output vaules for year 3 to get the vaule of year 4
now: 85000
1st year : 85000(1.05)
2nd year: 85000(1.05)^2
etc
can you see what I did ?
4462 .50
a. To make a table for 5 years, we will calculate the price of the house annually for each year.
Year | Price of the House (P)
-----------------------------
0 | $85,000
1 | $89,250
2 | $93,713
3 | $98,398
4 | $103,318
5 | $108,484
b. To calculate the price of the house in each year, we will need to apply the given 5% annual increase. We can use the formula:
P = P₀ * (1 + r)^y
Where:
P₀ is the initial price of the house ($85,000)
r is the rate of increase (5% or 0.05)
y is the number of years
Using this formula, we can calculate the price (P) of the house for each year by substituting the values into the formula and performing the calculations.
c. To find the number to multiply the output values for year 3 to get the value of year 4, we need to divide the price of the house in year 4 by the price in year 3:
Price in year 4 / Price in year 3
Therefore, in this case, it would be:
$103,318 / $98,398 = 1.0498