Business, 16.08.2020 01:01, renee9913

Justin invests $10,000 per month for five years at 6.00% annual effective with the first payment made immediately. He used the accumulated value of the investment to purchase a house. If inflation is 3% per year, what is the current value of the house he would purchase assuming houses appreciate at the inflation rate?

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answered: singlegirlforlife541

Justin

Present value of $714,677.31 at 3% per year for 5 years:

Discount factor of 3% for 5 years (discount factor table) = 0.863

Present value = $714,677.31 x 0.863

= $616,766.52

The house has a current value of $616,766.52.

Explanation:

a) Data and Calculations:

Investment = $10,000 per month

Period = 5 years or 60 months

Annual effective interest = 6% or 0.5% monthly

b) Future value of investment, using an online financial calculator:

FV (Future Value)$714,677.31

PV (Present Value)$529,841.89

N (Number of Periods)60.000

I/Y (Interest Rate)0.500%

PMT (Periodic Payment)$10,000.00

Starting Investment$10,000.00

Total Principal$610,000.00

Total Interest$104,677.31

c) First, we work out the future value of Justin's investment of $10,000 per month for five years at 6% annual effective. This gives us a future value of $714,677.31. Then, we can discount this future value to its present value with a discount factor of 0.863 if the inflation rate is 3% becauses houses appreciate at the inflation rate. Multiplying this future value by the discount factor gives the present value of the house as $616,766.52. This means that the house had appreciated in value by $97,910.79 at the inflation rate of 3% per year after five years.

answered: Guest

answer: yo mama

explanation: yo mama

answered: Guest

The business cycle is the periodic but irregular up-and-down movement in economic activity, measured by fluctuations in real gross domestic product (gdp) and other macroeconomic variables. a business cycle is typically characterized by four phases—recession, recovery, growth, and decline—that repeat themselves over time. economists note, however, that complete business cycles vary in length. the duration of business cycles can be anywhere from about two to twelve years, with most cycles averaging six years in length. some business analysts use the business cycle model and terminology to study and explain fluctuations in business inventory and other individual elements of corporate operations. but the term "business cycle" is still primarily associated with larger (industry-wide, regional, national, or even international) business trends.

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