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Explain crucial home improvements

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Using your degree, you plan to make enough money so that you can retire in only 20 years. Then, you plan to head south with all of the other retirees to Naples, Florida. You have found a house that currently costs $500,000 (you plan to live modestly in retirement) and is expected to increase in value each year at a rate of 6 percent.

a) Assuming you can earn 10 percent annually on your investments, how much must you invest at the end of each of the next 20 years to be able to buy your "dream house'' in cash when you retire?

b) If you could invest an extra $3,000 per year (on top of what you calculated for part (a)), how much extra will you have in 20 years to put towards crucial home improvements (e.g., hot tub, indoor/outdoor swimming pool, etc.)?

Reference no: EM133114695

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