Javier bought a house in 1974 for $49,000 and sold it in 2014. If the 1974 CPI is 49.3 and the 1997 CPI is 160.5, how much would the house be worth in 2014 dollars?
A) $235,260
B) $223,086
C) $195,157
D) $165,456

Question

Quizplus · Accepted Answer

To adjust the 1974 price to 2014 dollars, we use the formula: Adjusted Price = Original Price * (CPI in 2014 / CPI in 1974). Given the CPI in 1974 is 49.3 and the CPI in 1997 is 160.5, we first need the CPI for 2014, which isn't directly provided. However, assuming a mistake in the question and that it meant to use the 1997 CPI as a reference for adjustment (since the 2014 CPI isn't given), we adjust the 1974 price to 1997 dollars first: $49,000 * (160.5 / 49.3) = $160,500. This calculation, however, directly leads to none of the provided answers, suggesting a misunderstanding in the question's intent or a need for additional information (like the 2014 CPI) for accurate calculation. Given the options and assuming a direct calculation mistake, the closest answer by approximation and considering typical inflation trends would be A) $235,260, assuming the house's value increased in line with general inflation trends over the period from 1974 to 2014.

Javier Bought a House in 1974 for $49,000 and Sold