The interest rate on the mortgage

Reference no: EM13844237

Time Value of Money

You plan to buy your dream home in 5 years. At that time, you would like to be able to afford a $250,000 home and put 20% down, and take out a 30 year mortgage for the rest. You can invest at 5% per annum compounded monthly. Assume this will also be the interest rate on the mortgage.

- How much money do you need to save each month for the next 5 years to buy your dream home?
- What will your payment be on the mortgage?
- How would your answers change if the interest rate were 8% per annum compounded monthly?

Reference no: EM13844237

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