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The price of a vacation home is currently $345,866. If the price of vacation homes is...

The price of a vacation home is currently $345,866. If the price of vacation homes is increasing at a rate of 3.25% per year, how much would a vacation home cost in 6 years?

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Expert Solution

Given Price of vacation home currently = $ 345,866

Rate of price increase (R )= 3.25%

Number of time period (N)= 6 Years

Price of vacation home after N years = Current price * (1+ R%) ^N

Price of vacation home after 6 Years = $ 345,866 * (1+ 3.25%) ^6

= $ 345,866 * (1.0325) ^6

= $ 345,866 * 1.21154

                                                           = $ 419,033                                                                   

Hence, price of vacation home will be $ 419,033 after 6 years.

jeff jeffy answered 1 year ago
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