An average home in Chicago costs $295,000. If house prices are expected to grow at an average rate of 3 percent per year, what will a house cost in five years?
A) $328,995.61
B) $338,941.27
C) $341,985.85
D) $347,028.19

Question

Quizplus · Accepted Answer

To find the future cost of the house, you can use the formula for compound interest: Future Value = Present Value * (1 + rate)^time. Here, Present Value = $295,000, rate = 3% or 0.03, and time = 5 years. So, Future Value = $295,000 * (1 + 0.03)^5 = $341,985.85.

An Average Home in Chicago Costs $295,000