Question

In: Finance

What will a $190,000 house cost 5 years from now if the price appreciation for homes...

What will a $190,000 house cost 5 years from now if the price appreciation for homes over that period averages 7% compounded annually?

Solutions

Expert Solution

Information provided:

Present value= $190,000

Time= 5 years

Interest rate= 7%

The question is solved by calculating the future value.

Enter the below in a financial calculator to compute the future value:

PV= -190,000

N= 5

I/Y= 7

Press the CPT key and FV to compute the future value.

The value obtained is 266,484.83.

Therefore, the house will cost $266,484.83 in 5 years from now.


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