Question

You want to buy a house in five years. You prefer to live in an area in which houses are currently selling at an average price of $325,000. You know that the average price of the houses in the area will likely increase by 1.25% per year over the next five years. What will be the average price of a house in the area in five years? Nper PMT PV You know that 20% of the price of the house. You plan to deposit $1,000 immediately in an account that pays 4.5% APR compounded monthly. What will be the amount of the payment that you will need to make at the end of each month to have your downp you will need to save enough money over five years to be able to have a down payment of aymen t at the end of five years. Nper PMT PV

Answer 1

Answer 1:

Average price of house in the area in 5 years = $345,826.70

Workings:

The above excel with 'show formula'

Answer 2:

Amount of payment that you will need to make at the end of each month for 60 months = $1011.44

Workings:

Average price of house in the area in 5 years = $345,826.70​​​​​​​

20% payment = FV = 20% * $345,826.70​​​​​​​ = $69,165.34

PV = Amount deposited immediately = $1000

nper = Number of months = 5 * 12 = 60

Monthly interest rate = 4.5%/12 = 0.375%

The above excel with 'show formula'