A Kelly plans to take out a mortgage at Bank C exactly two years from today for a house that she will buy for $1 million at that time. In order to save for a 25% down payment, Kelly will save a constant fraction of her monthly paycheck in a savings account (with an APR of 7.2%, compounded monthly) starting a month from today. Kelly's paycheck a month from today will be $15,000 and it will grow at 1% per month every month for the next two years. Calculate the fraction of her monthly paycheck that Kelly should save every month in order to have $250,000 in her bank account two years from today. Ignore inflation and taxes.
A Kelly plans to take out a mortgage at Bank C exactly two years from today for a house that she will buy for $1 million at that time. In order to save for a 25% down payment, Kelly will save a constant fraction of her monthly paycheck in a savings account (with an APR of 7.2%, compounded monthly) starting a month from today. Kelly's paycheck a month from today will be $15,000 and it will grow at 1% per month every month for the next two years. Calculate the fraction of her monthly paycheck that Kelly should save every month in order to have $250,000 in her bank account two years from today. Ignore inflation and taxes.
Chapter4: Time Value Of Money
Section: Chapter Questions
Problem 24PROB
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Transcribed Image Text:A Kelly plans to take out a mortgage at Bank C exactly two years from today
for a house that she will buy for $1 million at that time. In order to save for
a 25% down payment, Kelly will save a constant fraction of her monthly
paycheck in a savings account (with an APR of 7.2%, compounded
monthly) starting a month from today. Kelly's paycheck a month from
today will be $15,000 and it will grow at 1% per month every month for
the next two years. Calculate the fraction of her monthly paycheck that
Kelly should save every month in order to have $250,000 in her bank
account two years from today. Ignore inflation and taxes.
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