FBWFF1013: Taking into consideration the fact that the $98,000 home price will grow at 4% per year, what will be the future median home selling price: Fundamentals of Finance Case Study, UUM, Malaysia

Questions

1. Taking into consideration the fact that the $98,000 home price will grow at 4% per year, what will be the future median home selling price in Lakewood in eight years? What amount will Kate Myers have to accumulate as a down payment if she does decide to buy a house in Lakewood?

2. Based on your answer from number 1, how much will have to be deposited into the Merrill Lynch account (which earns 8% per year) at the end of each month to accumulate the required down payment? 3. If Kate decides to make end-of-the-year deposits into the Merrill Lynch account, how much would these deposits be? Why is this amount greater than twelve times the monthly payment amount?

Answer

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