Aya and Sakura would like to buy a house and their dream home costs $500,000. Their goal is then to save $50,000 for a down payment and then would take out a mortgage loan for the rest. They plan to put their monthly saved amount in a conservative mutual fund that has a track record of a 5.2% rate of return. To be sure they don’t go spending this money on other things, they are going to move it into their investment account at the beginning of each month. Their hope is to be able to buy this home in 7 years. What would their monthly savings amount have to be to reach this goal? What will be the total interest earned be?
Aya and Sakura would like to buy a house and their dream home costs $500,000. Their goal is then to save $50,000 for a down payment and then would take out a mortgage loan for the rest. They plan to put their monthly saved amount in a conservative mutual fund that has a track record of a 5.2% rate of return. To be sure they don’t go spending this money on other things, they are going to move it into their investment account at the beginning of each month. Their hope is to be able to buy this home in 7 years. What would their monthly savings amount have to be to reach this goal? What will be the total interest earned be?
Chapter16: Real Estate And High-risk Investments
Section: Chapter Questions
Problem 2FPC
Related questions
Question
ANSWER USING Time Value of Money Calculations AND FORMULAS
Aya and Sakura would like to buy a house and their dream home costs $500,000. Their goal is then to save $50,000 for a down payment and then would take out a mortgage loan for the rest. They plan to put their monthly saved amount in a conservative mutual fund that has a track record of a 5.2%
What would their monthly savings amount have to be to reach this goal?
What will be the total interest earned be?
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
This is a popular solution!
Trending now
This is a popular solution!
Step by step
Solved in 3 steps
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, finance and related others by exploring similar questions and additional content below.Recommended textbooks for you
Principles of Accounting Volume 2
Accounting
ISBN:
9781947172609
Author:
OpenStax
Publisher:
OpenStax College
Principles of Accounting Volume 2
Accounting
ISBN:
9781947172609
Author:
OpenStax
Publisher:
OpenStax College