In this example your are interested in purchasing a new home in the next year. Your concern is the the Federal Reserve

$($

The Fed

$)$

$$is expected to increase interest rates over the next year,

$($

upwards of

$2$

$\%$

$$is projected

$)$

$.$

$$As a result you want to decide if you should buy now of wait.

Variables to consider in your decision include the following.

Based upon your current salary you decide that you can afford $

$2000\mathrm{.}00$

$$per month.

Your bank has approved you for a

$(30$

$$year

$)$

$$loan at an interest rates of

$5$

$\%$

$.$

$1)$

$$Based upon the above information, how much value

$($

in dollars

$)$

$$can you currently afford when buying home?

$2)$

$$How much value

$($

in a home

$)$

$$can you afford if you wait until next year if interest rates increase by

$1$

$\%$

$?$

$3)$

$$How much value

$($

in a home

$)$

$$can you afford if you wait until next year if interest rates increase by

$2$

$\%$

$?$

$4)$

$$Show all work and give a brief summary explaining the difference in calculations and how you achieved you answers.