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
Let $P_0$ be the price of the house ain 1990. Then the price in 2012 (after 12 years) is
\[P_{12}=(1+\frac{3}{100})^{12}P_0=(\frac{103}{100})^{12}P_0.\]
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.

574
Join Matchmaticians Affiliate Marketing
Program to earn up to a 50% commission on every question that your affiliated users ask or answer.
- 1 Answer
- 302 views
- Pro Bono
Related Questions
- CLT and probability
- Why is the t-test for two independent samples $\ t^* = \frac{(\bar{x}_1 - \bar{x}_2)}{\sqrt{\frac{S_1^2}{n_1} + \frac{S_2^2}{n_2}}}$?
- Statistical significance
- real analysis
- Probability of choosing the bakery with the best bread
- statistics- data analysis
- Interior of union of two sets with empty interior
- Constructing Monotonic Sequences Converging to an Accumulation Point in a Subset of $\mathbb{R}$