Question 4: You are now 28 years old, and have decided to purchase a house for...
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Question 4: You are now 28 years old, and have decided to purchase a house for capital appreciation and for rental income in Cherry Gardens. You plan to buy the house in the next 20 years, when you are 48 years old. To achieve this objective, you have decided to invest your accumulated and continuous annual savings for the next 20 years as follows: 1. At the end of each year for the next 10 years to put aside $100,000. 2. At the end of year 11, you will use $150,000 from the pool of funds to settle a credit card debt. 3. For the remaining 9 years (years 12-20) to put aside a further $200,000 at beginning of each year. Required: What is the present value of these cash flows if the discount rate is 7%? the (25 marks) Question 4: You are now 28 years old, and have decided to purchase a house for capital appreciation and for rental income in Cherry Gardens. You plan to buy the house in the next 20 years, when you are 48 years old. To achieve this objective, you have decided to invest your accumulated and continuous annual savings for the next 20 years as follows: 1. At the end of each year for the next 10 years to put aside $100,000. 2. At the end of year 11, you will use $150,000 from the pool of funds to settle a credit card debt. 3. For the remaining 9 years (years 12-20) to put aside a further $200,000 at beginning of each year. Required: What is the present value of these cash flows if the discount rate is 7%? the (25 marks)
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