Question
1. You would like to buy a house that currently costs $418,000 in the same neighborhood where you are renting a house. Real estate in
1. You would like to buy a house that currently costs $418,000 in the same neighborhood where you are renting a house. Real estate in this area is expected to increase by 4% a year. What will be the expected price in 4 years?
2. You plan to deposit $6,500 at the end of every year into your retirement account. a) If these funds have average returns of 6% per year over the next 45 years, what will you have in 45 years? Assume end-of-year deposits. b) Think about how much you would have if you put the $6500 every year for 45 years in a safety deposit box where it does not earn any return. How much more do you have by earning the 6% a year?
3. You spend about $30 per week on buying coffee at coffee shops, $1,560 per year. If you saved that money for 3 years earning 4% per year, what would you have at the end of 3 years? Assume the $1,560 is deposited at the end of every year.
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