arah plans to buy a house for $120,000 if that real estate is expected to increase in value by 5% each year what will its approximate value be seven years from now
arah plans to buy a house for $120,000 if that real estate is expected to increase in value by 5% each year what will its approximate value be seven years from now
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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Sarah plans to buy a house for $120,000 if that real estate is expected to increase in value by 5% each year what will its approximate value be seven years from now?

Transcribed Image Text:Answer
money to double?
Table
tments,
long
2. Sara plans to buy a house for $120,000. If that real estate is expected to increase in
value by 5 percent each year, what will its approximate value be seven years from now?
Fable
take for your
c. At an annual interest rate of 5 percent, how long will it take for your savings to
double?
Answer
3. If you desire to have $10,000 for a down payment for a house in five years, what
amount would you need to deposit today? Assume that your money will earn 5 percent.
Expert Solution
Step 1
The concept of time value of money will be used here.
The concept of time value of money states that money or a financial security’s or an asset’s worth changes with passage of time as the effect of compounding comes into picture.
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