Gross salary in savings certificates

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Reference no: EM131810450

Joan earns a salary of $40,000 per year, and she expects to receive increases at a rate of 4% per year for the next 30 years. She is purchasing a home for $80,000 at 10.5% for 30 years (under a special veteran's preference loan with 0% down). She expects the home to appreciate at a rate of 6% per year. She will also save 10% of her gross salary in savings certificates that earn 5% per year. Assume that her payments and deposits are made annually. If inflation is assumed to have a constant 5% rate, what is the value (in year-1 dollars) of each of Joan's two investments at the end of the 30-year period?

Reference no: EM131810450

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