Answer:
The correct option is 39.7%
Step-by-step explanation:
According to data given:
Olivia is 18 and would like to buy a house when she is 30.
it mean n=30-18=12
we have been asked to find the discount factor for today's prices if the housing values increase 8% per year?
It means r=0.08, Annual \ Compounding.
As we know that
A=p(1+r)^{nt}
Let current price be 100, then the future price will be
A=100(1+0.08)^{12*1}=100(1.08)^{12}\\ \\ A=100*2.51817=251.817\\ \\
Hence the discount factor is =\frac{100}{251.817} *100=39.7 Percent
Hence, the correct option is 39.7%.
