# A house costs 150,000 in 2002 and inflation rate has been 3% since 1990, what would the price of the house be in 1990

## 1 Answer

\[P_{12}=(1+\frac{3}{100})^{12}P_0=(\frac{103}{100})^{12}P_0.\]

Hence

\[P_0=(\frac{103}{100})^{-12}P_{12}=(\frac{103}{100})^{-12}150000=\$ 105,206.98.\]

Here we use the formula

\[P_n=(1+r)^n P_0,\]

where $r$ is the interest rate and $P_n$ is the price after $n$ years, and $P_0$ is the initial price.

Savionf

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