Inflations impact on price of an asset

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Reference no: EM131190422

Inflation’s impact on price of an asset. Tyler is working on his pilot’s license and dreams of one day owning his own personal aircraft. Tyler is putting away $1,250 per month in an account earning 9.25% annually. The plane he would like to buy currently costs $430,000 and is expected to increase in price at an annual inflation rate of 3.25%. How long will it take Tyler to save the funds to buy this plane? Tyler also wants to know what monthly savings it would take to buy the plane at the end of each year. For example, if he wanted to buy the plane in one year, what would the monthly savings need to be for the next twelve months? If he wanted to buy the plane in two years, what would the monthly savings need to be for the 24 months? Do this for every year up to twenty years. In the spreadsheet, estimate the future price of the plane at the end of each year, and then, based on this future value, find the monthly savings that equals this future value at an earnings rate of 9.25%.

Reference no: EM131190422

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