How much money will you have totally at the end of year

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Reference no: EM132165983

Questions -

Q1. If you choose to save $500 each month from your salary and invest them in the stock market for 3 years, how much will you have at the end of year 3? Assume your expected return is 8%. In addition to save $500 per month, each year you will invest the bonus you receive at the end of the year in stock market with 8% expected return, how much money will you have totally (from investments of both monthly saving and bonus) at the end of year 3?

Q2. Based on your answer to the previous question, if at year 3, you want to buy a house that is sold at $300,000 and it requires 20% down payment and $5,000 closing costs, can you afford it? Use the 30 year fixed mortgage rate to make calculations. If, alternatively, you want to borrow a 15 years fixed rate mortgage, can you pass the mortgage bank's evaluation? Usually the banks don't allow your monthly mortgage payment to exceed 30% of your before tax income. All others equal, to be qualified for a 15 years fixed rate mortgage borrowing, how much annual salary do you have to make?

Reference no: EM132165983

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