You are currently employed on a salary of $85,000 a year. You expect a 5 percent annual increase in your salary. Your federal, state, and local taxes and deductions place on a 30 percent tax rate. Your plan is to buy your first house five years from now at a projected price of up to 3 times your annual salary at the time of the purchase. You start now to set aside $650 every month in an account that will earn 4 percent nominal rate annually in order to accumulate enough money for a down payment. You have been pre-approved for a 15-year, 4 percent conventional mortgage loan (based on the estimates of your income and everyday expenses, mortgage payment, mortgage insurance, property taxes) provided that your debt ratio does not exceed 40 percent at the time of actual purchase and financing. The mortgage agreement will require that you will provide evidence of a homeowners insurance coverage. Additionally, you will be responsible for your property taxes. (These must be determined by you from an insurance agent and the county office respectively at the time of purchase and must be factored into the purchase decision to determine eligibility). Just six months into your mortgage payment, you win a lottery jackpot and decide to pay off your entire mortgage loan.

1. Project the amount of money in the savings account for your down payment in five years.