Tom wants to save for a 20% down payment for a "starter" house to get himself into the real estate market. He know how to use a hammer, so plans on buying a "fixer-upper" that he can work on over weekends (i.e build "sweat equity"). He wants to know how much he will need to save each year to allow him to buy the house within 10 years. He will increase his savings each year to match his pay raises, which he assumes will be 7% per year. He will save it each year into his bank account. At the end of that year, he will add that year's savings. He believes housing prices will inflate an average of 5% per year in the area where he is shopping. He plans to start saving at the start of this coming year, which will be Year 1 in his plan. The cost of the type of house in Year 1 he is looking for that is still within about 30 minutes commute of his work is shown below. A. If he earns a return of 10% per year on his savings, when will he be able to buy the house? B. If he thinks he may be getting married and his wife will make as much as he does so they can save twice as much, how much faster could they buy the house? Inputs: Monthly Savings: ? Raises (Incr. in Savings) 7% Current price of house: $400,000 House price inflation 5% Return on Savings 10%