Choose the one alternative that best completes the statement or answers the question.
-The Feldmans bought their first house for $14,000. Over the years they moved three times into bigger and bigger houses. Now, 41 years later, they are ready to retire and want a smaller house like the first one they
Bought. If inflation in property values has averaged 3.6% per year during that time, how much will such a
House cost them now? (Round your answer to the nearest dollar.)
A) $3,284
B) $3,200
C) $61,256
D) $59,687

Question

Quizplus · Accepted Answer

The correct answer is D. The price of the house will be $59,687.The formula for calculating the future value of an investment is:FV = PV * (1 + r)^nwhere:FV is the future valuePV is the present valuer is the annual interest raten is the number of yearsIn this case, the present value is $14,000, the annual interest rate is 3.6%, and the number of years is 41.So, the future value is:FV = $14,000 * (1 + 0.036)^41FV = $14,000 * 4.263FV = $59,687

Choose the One Alternative That Best Completes the Statement or Answers