Assume the growth rate that you calculated in #1 prevailed since 1900. Which price was paid for the house in 1964?

The Time Value of Money (TVM) is a concept that can be used to determine the price paid for an asset such as a house at any given year based on its value in 1900. In order to calculate this, one must first identify and calculate the growth rate which will be applied over time; in this case, we will assume the growth rate was 2.5%. To find the price paid for a house in 1964, one must then use the formula: Price Paid = (1 + Growth Rate)^(Year-1900) * Initial Price where “year” represents 1964 and “initial price” represents $2000 – the initial cost of the house back in 1900. Applying these variables into our equation results in a price paid of $4,053 for our house in 1964.

This demonstrates how TVM can be used to accurately predict long-term returns on investments since it takes into account inflation and other factors associated with economic growth over time. By understanding and applying TVM principles, individuals are able to make informed decisions regarding their finances including budgeting for purchases such as real estate or planning for retirement goals. Furthermore, knowledge about TVM helps investors gauge potential profitability when investing their money into different types of assets by comparing projected returns versus current market conditions before committing capital outlay.