You are thinking of buying a condo at the beach when you retire in 20 years. The
ID: 2670592 • Letter: Y
Question
You are thinking of buying a condo at the beach when you retire in 20 years. The average price for the house you want is $175,000 today.A.) How much would you need to deposit today (as a lump sum), to pay cash for the house if the house price increases at the rate of 5% per year and you can earn 12% on your investment?
B.) How much would you need to at the end of each year, to pay cash for the house if the house price increases at the rate of 5% per year and you can earn 12% on your investment?
Explanation / Answer
price of the house in the first year=175000 after 20 years price of the house =442216.3 value of the house every year respectively till 20th year 175000 183750 192937.5 202584.375 212713.5938 223349.2734 234516.7371 246242.574 258554.7027 271482.4378 285056.5597 299309.3877 314274.8571 329988.5999 346488.0299 363812.4314 382003.053 401103.2056 421158.3659 442216.2842 so we have to deposit $51344.31 initially..so for every year investment increases by 12% value of your investment after every year 51344.31 57505.6272 64406.30246 72135.05876 80791.26581 90486.21771 101344.5638 113505.9115 127126.6209 142381.8154 159467.6332 178603.7492 200036.1991 224040.543 250925.4082 281036.4571 314760.832 352532.1318 394835.9877 442216.3062
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