The Estradas are planning to buy a house 2 year(s) from now. Housing experts in their area have estimated that the cost of a home will increase at a rate of 9% / year during that 2-year period. If this economic prediction holds true, how much can they expect to pay for a house that currently costs $90,000? Round your answer to two decimal places.
A) $106,929.00
B) $107,326.67
C) $107,749.56
D) $107,677.22

Question

The Estradas are planning to buy a house 2 year(s) from now. Housing experts in their area have estimated that the cost of a home will increase at a rate of 9% / year during that 2-year period. If this economic prediction holds true, how much can they expect to pay for a house that currently costs $90,000? Round your answer to two decimal places. ​
A) $106,929.00
B) $107,326.67
C) $107,749.56
D) $107,677.22

Quizplus · Accepted Answer

The correct answer is A. $106,929.00.The Estradas can expect to pay $106,929.00 for a house that currently costs $90,000. This is because the cost of a home is expected to increase at a rate of 9% per year for the next two years. This means that the cost of a home will increase by 9% in the first year and by 9% of the new cost in the second year. The total increase in cost over the two-year period will be 18.81%. Therefore, the Estradas can expect to pay $106,929.00 for a house that currently costs $90,000.

The Estradas Are Planning to Buy a House 2 Year(s)