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Suppose that a house is worth $350,000 today. If house prices are expected to decline by 15% for each of the next two years. How much will the house be worth at the end of 2 years?

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Answer: $‭252,875‬

Explanation:

This concerns a value in future (2 years) so the future value formula can be used;

= 350,000 * ( 1 - 15%) ²

= $‭252,875‬

House will be worth $‭252,875‬ at the end of 2 years if it declines in value at 15% per year.

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