Question

You want to buy a house within 3 years, and you are currently saving for the down payment. You plan to save $8,000 at the end of the first year, and you anticipate that your annual savings will increase by 20% annually thereafter. Your expected annual return is 12%. How much will you have for a down payment at the end of Year 3? Do not round intermediate calculations. Round your answer to the nearest cent.

$  

Answer 1

Year	Saving	Future value of 1		Future value of saving
a	b	c=(1.12^(3-a))		d=b*c
1	$       8,000	1.2544		$ 10,035.20
2	9,600	1.1200		10,752.00
3	11,520	1.0000		11,520.00
Total				32,307.20
So,
Amount saved for down payment is				$ 32,307.20