Question
1. You would like to buy a retirement home in Florence, Italy in 7 years. The type of home you want to buy currently costs
1.
You would like to buy a retirement home in Florence, Italy in 7 years. The type of home you want to buy currently costs $417,217, but you expect the price to rise at 2% per year for the next 7 years.
If your investments earn 5.92% APR compounded annually (nominal), how much do you have to invest in today to be able to purchase your retirement home?
2. As a graduation present, you decide to pay for 7 months of your childs rent, starting in 4 months. Each months rent is $928. If your investments earn 3.74% APR (compounded monthly), how much would you have to invest today to exactly pay for the rent?
3. A college graduate earns about $1,500 per month more than someone that only has a high school diploma. If a working life starts next month and lasts 45 years, how much is a college degree worth today if market interest rates are 4.5% APR, compounded monthly?
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