The stock market has an average annual return of 10% per year. We will consider the annual return to be an annual interest rate Perhaps you want to buy a house in 20 years. The average home in San Jose cost $1.2 million this year. You will need to put a down payment of 15% to buy a house at this price (a down payment is a proportion of the price of the house you pay upfront, in this case 15% of $1.2 million). Assuming 10% annual interest, compounded yearly, how much would you need to invest now to pay for this down payment in 20 years?
The stock market has an average annual return of 10% per year. We will consider the annual return to be an annual interest rate Perhaps you want to buy a house in 20 years. The average home in San Jose cost $1.2 million this year. You will need to put a down payment of 15% to buy a house at this price (a down payment is a proportion of the price of the house you pay upfront, in this case 15% of $1.2 million). Assuming 10% annual interest, compounded yearly, how much would you need to invest now to pay for this down payment in 20 years?
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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The stock market has an average annual return of 10% per year. We will consider the annual return to be an annual interest rate
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Perhaps you want to buy a house in 20 years. The average home in San Jose cost $1.2 million this year. You will need to put a down payment of 15% to buy a house at this price (a down payment is a proportion of the price of the house you pay upfront, in this case 15% of $1.2 million). Assuming 10% annual interest, compounded yearly, how much would you need to invest now to pay for this down payment in 20 years?
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