In 2000, when the consumer price index (cpi) was 172.2, aramis purchased a house for $111,500. assuming that the price of houses increased at the same rate as the cpi from 1990 to 2000, approximately how much would the house have cost in 1990, when the cpi was 130.7?

The cost of the hous in 1990 was of $84,628.63 dollars without rounding

with rounding to nearest cent: 84,740 dollars

Explanation:

We will solve for the cost of the house in 1990

We do a cross multiplication as follow:

CPI 172.2 --> $  111,500.00

CPI 130.7 -->  $    1115,000/172.2 x 130.7 = $  84.628.63

We can also solve for a ratio of conversion between CPI

130.7 / 172.7 = 0.759

A dollar in the year 2000 has the same purchase power of 76 cent in 1990

Now we multiply by 111,500 dollars to know the value in 1990

111,500 x 0.76 = 84,740

As we made a round up we got a difference iwth the previos question

the first one $24,630

answer; institution based;