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
- 274 views
- Pro Bono
Related Questions
- Borell-Cantelli Lemma application
- Multivariate Student-t Posterior Predictive - Detailed Derivation
- Goalscorer Probability question
- Help with probability proofs and matrices proofs (5 problems)
- Density plot
- What is the probability that the last person to board an airplane gets to sit in their assigned seat?
- Probability of any random n points on a line being within a given distance
- Confidence Interval,Standard Deviation,Mean