How much will tom holland deposit into savings

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Question - Tom Holland just turned 23 years old on the 11th of May, 2021. Let us assume that he wishes to purchase a home for approximately $1 million in about 10 years (after his birthday) with about a down payment of 20%. Lets say that his next monthly paycheck is about $5000 and expects to grow about 0.8% after that per month. Also, Tom Holland achieves a 6% return rate per yr which is compounded quarterly on his investment.

Find the effective annual rate of return on Tom Holland's investment.

Find the effective rate per month of which Tom Holland earns on his monthly savings.

Find the present value as of the 11th of May, 2021 of the down payment of which Tom Holland must have in 10 years.

Tom Holland would rather save for the down payment from the end of the month (1st savings deposit would be June 10th, 2021). If we assume that the amount of dollars that Tom Holland saves per month will grow at 0.8% (same as the income growth), how much will Tom Holland deposit into savings in the 1st month? 2nd month?

Reference no: EM133089449

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