EAR Mr. Anderson plans to buy a house in 5 years. He expects it to cost...

 

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EAR Mr. Anderson plans to buy a house in 5 years. He expects it to cost $700,000 at that time. He has the following sources of funds: 1. He will save up money by making quarterly deposits of $8,000 in an investment account that pays 9% APR compounded quarterly. 2. His generous Aunt Trinity will deposit $60,000 into Mr. A's account with Blue Bank 2 years from now. The account pays 6.6% APR compounded monthly. 3. At the time of purchase, Mr. A believes he will be able to afford to take out a 30-year, 9.6% APR (monthly compounding) loan with monthly payments of $3,000. Mr. Anderson's friend, Morpheus, has offered to deposit SX at the end of each year for the next 5 years into an account with Red Bank so that Mr. A will have enough to buy the house in 5 years. The Red Bank account pays 6.77% APR with continuous compounding. Based on this information, calculate the expected size of the deposits (X) that Morpheus will need to make. EAR Mr. Anderson plans to buy a house in 5 years. He expects it to cost $700,000 at that time. He has the following sources of funds: 1. He will save up money by making quarterly deposits of $8,000 in an investment account that pays 9% APR compounded quarterly. 2. His generous Aunt Trinity will deposit $60,000 into Mr. A's account with Blue Bank 2 years from now. The account pays 6.6% APR compounded monthly. 3. At the time of purchase, Mr. A believes he will be able to afford to take out a 30-year, 9.6% APR (monthly compounding) loan with monthly payments of $3,000. Mr. Anderson's friend, Morpheus, has offered to deposit SX at the end of each year for the next 5 years into an account with Red Bank so that Mr. A will have enough to buy the house in 5 years. The Red Bank account pays 6.77% APR with continuous compounding. Based on this information, calculate the expected size of the deposits (X) that Morpheus will need to make.

Answer rating: 100% (QA)

To calculate the expected size of the deposits X that Morpheus will need to make we can use the conc... View the full answer