While vacationing in Florida, John Kelley saw the vacation home of his dreams. It was listed with a sale price of $176,000. The only catch is that John is 37 years old and plans to continue working until he is 65. Still, he believes that prices generally increase at the overall rate of inflation. John believes that he can earn 7% annually after taxes on his investments. He is willing to invest a fixed amount at the end of each of the next 28 years to fund the cash purchase of such a house (one that can be purchased today for $176,000) when he retires. a. Inflation is expected to average 3% a year for the next 28 years. What will John's dream house cost when he retires? b. How much must John invest at the end of each of the next 28 years to have the cash purchase price of the house when he retires? c. If John invests at the beginning instead of at the end of each of the next 28 years, how much must he invest each year?

Your Answer: (Round to two decimal places.)

a. When he retires, John's dream house will cost $ Blank 1. Fill in the blank, read surrounding text.

b. The amount John must invest at the end of each of the next 28 years to have the cash purchase price of the house when he retires is $ Blank 2. Fill in the blank, read surrounding text.

c. If John invests at the beginning instead of at the end of each of the next 28 years, the amount he must invest each year is $