Question

I need help with this one question!

Becky is 18 and would like to buy a house when she is 36. What is the discount factor for today’s prices if the housing values increase 6% per year?

Answer 1

I need help on how to get this.

The answers are
65.0%
16.7%
12.3%
35.0%

Answer 2

I thought it would be 108%

Answer 3

just set the price of the house today as 100 and work out how it will cost compounded at 6pc pa for (36 - 18) years.

so, if a $100 house today will be worth [totally made up number] $225 in 18 years time because of compounding, similarly a house worth $100 in 18 years time will be worth $100/225 now.