How much should john invest at the end of each years

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Question 1 - John is a 20-yesrs old young man who is working hard to buy his first house when he is 45. His potential dream house is around $200,000 now but inflation will increase its price. He is willing to invest a fixed amount at the end of each year for the next 25 years for his dream. Assume he can earn 9% annually after taxes on his investments.

Required - Expected inflation is to be around 5% per year for the next 25 years. What will the house cost when John is 45?

How much should John invest at the end of each of the next 25 years to have enough cash to purchase the house when reaches to 45?

If John invests at the beginning instead of at the end of each of the next 25 years, how much should he invest each year?

Question 2 - Lucy borrowed $18,000 business loan from her bank that is to be repaid in three equal, annual, end-of-year payments. The interest rate on the loan is 10%.

Required - What is Lucy's annual loan payment? Construct an amortization schedule for the loan.

Reference no: EM133081209

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