Question

You want to buy a house within 3 years, and you are currently saving for the down payment. You plan to save $7,000 at the end of the first year, and you anticipate that your annual savings will increase by 15% annually thereafter. Your expected annual return is 9%. How much will you have for a down payment at the end of Year 3? Do not round intermediate calculations. Round your answer to the nearest cent. Please show how to input on calculator if possible

Answer 1

The downpayment = FV of all annual savings =7000*(1+9%)^2+7000*(1+15%)*(1+9%)^1+7000*(1+15%)^2
= 26348.70

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