Calculate how much more michael will need

Assignment Help Finance Basics
Reference no: EM13257232

Michael wants to save in order to buy a house in 4 years which he estimates will cost $225,000. He has several sources of funds:
I. His parents will give him $1,000 per quarter starting in 3 months, which will be deposited into an account paying 5% compounded quarterly.
II. He will receive $5,000 from his Aunt's estate in one year's time which will be deposited into the same account as above.
III. He currently has $15,000 cash in a bank account (same as above).
IV. He will take out a mortgage at the time of purchase on which he'll make monthly payments of $1,000 over a 20 year amortization. He expects the interest rate on the mortgage at the time to be 4%.
a) Calculate how much more Michael will need to have in 4 years in order to be able to purchase the house.
b) To make up the shortfall, Michael will make monthly contributions to his investment account which earns 6% compounded annually. How much must he save each month to have enough to buy the house in 4 years' time?

Reference no: EM13257232

Questions Cloud

Question-bert farm store : On December 31, 2007, Bert's Farm Store had the following account balances in its accounting system. All year-end adjustments had been entered, but the books had not yet been closed.
Explain the temperature of the solution : The reaction of 0.25 g magnesium with 100 mL of 1 M hydrochloric acid (density d = 1.02 g/ml) raises the temperature of the solution from 20 °C to 35 °C . The specific heat for HCl is 3.93 J/(g.C).
Researched argument revised draft : Your researched argument is meant to stand as a culmination of all the work you have done throughout the course.You will more than likely be asked to write many of these as you move further into your academic and professional career
Social trends affect the formation of new religions : Among the religions we discussed this week, identify one religion that you find the most interesting. Explain your response. Explain at least three ways that social trends affect the formation of new religions and dictate new religious movements.
Calculate how much more michael will need : To make up the shortfall, Michael will make monthly contributions to his investment account which earns 6% compounded annually. How much must he save each month to have enough to buy the house in 4 years' time?
Briefly share two primary dimensions : What would be a briefly share two of your own primary dimensions of diversity, and two of your own secondary dimensions of diversity.no words limits.
What is the maximum possible coefficient of performance : To maintain a freezer box at -40°C on a summer day when the ambient temperature is 27°C, heat is removed at the rate of 1.25 kW. What is the maximum possible coefficient of performance of the freezer
What is the speed of electrons in the beam : Early black-and-white television sets used an electron beam to draw a picture on the screen. The electrons in the beam were accelerated by a voltage of 3.0 kV, What is the speed of electrons in the beam
Annual amount of depreciation using straight line : Calculate the annual amount of depreciation using straight line method

Reviews

Write a Review

Finance Basics Questions & Answers

  Determine the expected price of the stock

Allegheny Publishing's stock is expected to give a year end dividend, D1, of $4. The dividend is expected to increase at a constant rate of 8% per year, and the stock's required rate of return is 12%.

  Solving finance question

Suppose that the United State places a strict quota on goods imported from Chile and that Chile does not retaliate. Holding other factors steady, this event should immediately cause the United State

  Calculate the monthly savings

Son will start college in five years. Expect college to cost $10,000 per quater, each quaters cost will be payable in advance, & he will attend college all year long. Expect him to complete college in five years.

  Create a bond amortization table

Janson Bottle Corporation sold $400,000 in long-term bonds for $351,040. The bonds will mature in 10 years and have a stated interest rate of 8% and a yield rate of 10 percent.

  Determining rights offering

What are the earnings per share and price-earning ratio before new shares are sold via the rights offering?

  Organization reward structure

Describe the relationship between type of reward structure employed by an organization for its employees and employee effectiveness and work productivity.

  Actual deferral percentage test for nondiscrimination

Actual deferral percentage test for nondiscrimination in a 401(k) plan.

  Create a portfolio

You need to create a portfolio with a duration of 6 years. You can use a 3 year zero-coupon bond and a perpetuity which pays $80 each and every year forever and has yield of 10%. how much of the porfolio value in percentage you would have to invest i..

  Determine total profit margin and cash flow

Brandywine Homecare, a non-profit business, had revenues of 12 million dollar in 2007. Expenses other than depreciation totaled 75% of revenues, and depreciation expense was $1.5 million.

  Monthly mortgage payment

Compute the monthly mortgage payment made at the beginning of each month on a $100,000 mortgage.

  Computing overall net operating income

In order to receive $12,000 at the end of three years and $10,000 at the end of five years, how much must be invested now if you can earn 14 percent rate of return?

  Calculate capital gains yield on investment

Today, you sold 200 shares of SLG, Company stock. Your total return on these shares is 12.5 percent. You purchased shares one year ago at a price of $28.50 a share. You have received a total of $280 in dividends over the course of the year.

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd