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Please use the following information for questions 2 6 - 2 9 . Round all final answers to the nearest dollar ( but do not
Please use the following information for questions Round all final answers to the nearest dollar but do not round intermediate calculations Do not round percentages, and report them in decimal format eg
You are just graduating college and are beginning to think about your personal finances or perhaps you already have been! You decide that you would like to purchase a house years from now and wish to create a savings plan to meet that goal. You start your job next year and you save by depositing money into an account at the end of each year. Suppose that house prices today are $ and grow at a rate of per year. Further suppose that your starting annual salary next year is $ Your salary grows at a rate of per year, and money invested in the stock market may be invested at a annual rate of return. Assume that money invested in the stock market can be withdrawn freely ie with no tax implications
Q: Based on your answers to Q and Q you should have a series of cash flows that consist of your annual savings while working for the next ten years. Calculate the present value of each of these series of cash flows using a discount rate.
HintFood for thought: the present values of these two series of cash flows in Q and Q should be the same. Nevertheless, an individual may feel differently about them. Think about why this may be the case but you do not need to include these thoughts in your answer
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