Question
Rose wants to buy a second home that will eventually become her retirement home and does not want a mortgage to finance this second home.
Rose wants to buy a second home that will eventually become her retirement home and does not want a mortgage to finance this second home. She plans on spending approximately $130,000 in 10 years on this purchase. She has two zero-coupon bonds that mature in 10 years each with cash values of $1,157.98 and face values of $2,500. In 10 years, she will use them as part of her $130,000. The bonds have a semi-annual effective interest rate of 3.923%. What is Rose's required monthly deposit at the beginning of each month in order to accumulate the $130,000 she needs to buy her home at an assumed interest rate of 10% on her investment? A. $543.39 B. $618.17 C. $629.38 D. $605.17
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