Personal Finance (MindTap Course List)
13th Edition
ISBN: 9781337099752
Author: E. Thomas Garman, Raymond Forgue
Publisher: Cengage Learning
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Mary Kate, Ashley, Dakota, and Elle each want to buy a new home. Each needs to save enough to make a 25% down payment. For example, to buy a $100,000 home, a person would need to save $25,000. At the end of each year for four years, the women make the following investments:Required: 1. Calculate how much each woman is expected to accumulate in the investment account by the end of the fourth year. 2. What is the maximum amount each woman can spend on a home, assuming she uses her accumulated investment account to make a 25% down payment?
Bob Smith is saving for the down payment on a new car. If he is very careful with his money, he will have the full down payment in six months. Because his time frame is short, he is deciding between a low-risk saving option and a moderate-risk investment account. What would you recommend for Bob in these circumstances and why?
Jinhee Lee just graduated from college and began her first job. She has always wanted to buy a condo and believes that she could save enough for the down payment in three to five years. Would you recommend Jinhee place her money in a low- or moderate-risk investment vehicle? Why do you recommend this choice?
Juanita Romero is 16 and has earned some extra money at her summer job. She decides to invest it and let it grow until retirement. She has 49 years until retirement and realizes she can accept some risk. She’s deciding between an investment that has moderate risk and one that has a slightly higher risk and the possibility of a higher return. What would you…
A 25-year old engineer wants to save $15,000 per year until retiring at 65. Her plan is that after 5 years she will spend the savings on buying a house and later savings will be for retirement. As her income increases she wants to spend more on herself and her family, which is why she chose a fixed dollar amount to save. Her investing mix will become more conservative over the years so she expects her investment returns to average 5.5% over inflation. How much will she have saved for the house? How much will she have saved at retirement?
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