You will retire in 25 years and you are planning to buy a house. The house...

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You will retire in 25 years and you are planning to buy a house. The house you have targeted costs $3,500,000 today and is expected to increase in value each year at a rate of 1.5%. A) Calculate the price of the house 25 years later. (10 marks) B) Assume that you can earn 3% annually on your investment. If you want to invest a single lump-sum of money now for the payment of your house 25 years later, how much you must invest now? (10 marks) C) Suppose you want to buy the house right now, and you want to borrow $2,500,000 for 25 years repayment. Assume interest rate is 8% per annum. How much you need to pay each quarter for returning the loan? (10 marks) You will retire in 25 years and you are planning to buy a house. The house you have targeted costs $3,500,000 today and is expected to increase in value each year at a rate of 1.5%. A) Calculate the price of the house 25 years later. (10 marks) B) Assume that you can earn 3% annually on your investment. If you want to invest a single lump-sum of money now for the payment of your house 25 years later, how much you must invest now? (10 marks) C) Suppose you want to buy the house right now, and you want to borrow $2,500,000 for 25 years repayment. Assume interest rate is 8% per annum. How much you need to pay each quarter for returning the loan? (10 marks)

Answer rating: 100% (QA)

A To calculate the price of the house 25 years later we need to use the formula for compound interes... View the full answer