Question

In: Finance

5. You intend to buy a vacation home in eight years and plan to have saved...

5. You intend to buy a vacation home in eight years and plan to have saved $75,000 for a down payment. How much money would you have to place today into an invest that earns 9% per year to have enough for your desired down payment?

A) $37,640
B) $37,218
C) $35,335
D) $34,989

Solutions

Expert Solution

Annual rate of interest is 9% ; interest compounded Annually
Years FVF of $ 1 @ 9%
0                                     1.0000
1                                     0.9174
2                                     0.8417
3                                     0.7722
4                                     0.7084
5                                     0.6499
6                                     0.5963
7                                     0.5470
8                                     0.5019
Present Value   PVF @ 9% in Eighth Year Future Value
Present Value = $                           75,000.00 $                        0.5019 $                        37,640
Answer = Money desired for down Payment = OptionA =$ 37,640

jeff jeffy answered 2 years ago
Next > < Previous

Related Solutions

Anusha and Naveen are planning to buy their first home. They have saved $30,000 and will...
Anusha and Naveen are planning to buy their first home. They have saved $30,000 and will withdraw the maximum from their RRSPs under the Home Buyers’ Plan. They will pay the cost of CMHC mortgage loan insurance separately. They estimate closing costs at $8,200 and will take a 25-year mortgage at a rate of 3.2%, compounded semi-annually, for a 3-year term. They will pay the mortgage monthly. The home they wish to buy costs $450,000. How much of a mortgage...
Anusha and Naveen are planning to buy their first home. They have saved $30,000 and will...
Anusha and Naveen are planning to buy their first home. They have saved $30,000 and will withdraw the maximum from their RRSPs under the Home Buyers’ Plan. They will pay the cost of CMHC mortgage loan insurance separately. They estimate closing costs at $8,200 and will take a 25-year mortgage at a rate of 3.2%, compounded semi-annually, for a 3-year term. They will pay the mortgage monthly. The home they wish to buy costs $450,000. Part a How much of...
You want to have $2319724 saved for retirement. You plan toretire in 33 years. How...
You want to have $2319724 saved for retirement. You plan to retire in 33 years. How much would you need to save to day to meet your retirement goals if your investment is expected to grow at 6% in the market?
You plan on retiring in 30 years and want to have $3,000,000 saved in your retirement...
You plan on retiring in 30 years and want to have $3,000,000 saved in your retirement account. You will earn an average rate of return of 6% on your investments. How much will you need to invest each month in order to get to your goal.
You plan to retire in 34 years and would like to have saved $1,000,000 in your...
You plan to retire in 34 years and would like to have saved $1,000,000 in your tax-deferred retirement account. Currently, your balance in your account is zero. As a first pass analysis, assume that you make an annual contribution at the end of each year, starting with the current year. Also, assume that the dollar amount of each contribution is the same. Your investment options are such that you forecast a rate of return of 8% per year over the...
You plan to buy your dream home in 10 years. At that time, you would like...
You plan to buy your dream home in 10 years. At that time, you would like to be able to afford a $400,000 home and put 20% down (pay 20% of the purchase price with your own money), and take out a 30 year mortgage for the rest. You can invest at 9% per year compounded monthly. Assume this will also be the interest rate on the mortgage. a. How much money do you need to save each month for...
You and your wife have finally saved up enough money to buy your dream home.  You purchase...
You and your wife have finally saved up enough money to buy your dream home.  You purchase a $210,000 home in a nice neighborhood, paying 5% down as a down payment and obtaining the rest of the proceeds to buy your home from the local bank.  Assume that the loan requires you to make monthly payments, with the annual interest rate stated as 5.75% and the term of the loan being 30 years. (12 points) A.        What is your monthly payment? $1166.32             B.        Set...
19. How much will you have at the end of 5 years in a European vacation...
19. How much will you have at the end of 5 years in a European vacation account if you deposit $200 a month, and the account earns 12 percent compounded monthly? Group of answer choices $16,334 $15,247 $16,497 $15,817 20.   Suppose you put $100 into a savings account today, the account pays 8% compounded semiannually, and you withdraw $50 one year after your initial deposit. What would your ending balance be 20 years after the initial $100 deposit was made,...
If the probability that a family will buy a vacation home in Manmi, Malibu, or Newport...
If the probability that a family will buy a vacation home in Manmi, Malibu, or Newport is 0.25, 0.10, 0.35, what is the probability the family will consummate one of these transactions? please show all wor with explanation.
You would like to buy a retirement home in Florence, Italy in 5 years. The type...
You would like to buy a retirement home in Florence, Italy in 5 years. The type of home you want to buy currently costs $538,108, but you expect the price to rise at 3% per year for the next 5 years. If your investments earn 5.21% APR compounded annually (nominal), how much do you have to invest in years 1 to 5 to be able to purchase your retirement home?
ADVERTISEMENT
Subjects
ADVERTISEMENT
Latest Questions
ADVERTISEMENT