Bob wants to save for 20% down payment on a condo that in today's market sells for $500,000. He assumes that price will appreciate 4% per year. He feels he can comfortably save only $300 per month but will increase it each year to equal inflation, which he assumes will be 3%. He will save it monthly each year in his bank account (zero interest), then invest it at the end of that year. He already has $10,000 (call this the savings at the end of "Year 0"). He invests it 100% in an S&P 500 index mutual fund and will continue to invest all of his saving each year in the same way.
A. If he invests now and assumes the next 20 years' returns will be exactly like last 20 years (1998-2017 in the attached database), how long will it take him to reach his goal? (Hint - at the end of Year1 he will have $16,138)
B. If he wanted to reach his goal within 5 years under the same assumptions, how much would he have to save per month?