How much does the value of each investment change

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Question: In Problem, how much does the value of each investment change if the appreciation rate, rate of salary increases, fraction of salary saved, or savings account interest rate are halved? What is the relative importance of the changes?

Problem: John earns a salary of $40,000 per year, and he expects to receive increases at a rate of 4% per year for the next 30 years. He is purchasing a home for $80,000 at 10.5% for 30 years (under a special veterans' preference loan with 0% down). He expects the home to appreciate at a rate of 6% per year. He will also save 10% of his gross salary in savings certificates that earn 5% per year. Assume that his payments and deposits are made annually. What is the value of each of John's two investments at the end of the 30-year period?

Reference no: EM132158684

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