posted by nneka on .
can anyone help me set up this problem bc im totally lost....
if a house = $125,000 you want to buy this house in 10 years its expected to increase 5% a year over a 10 year period assuming you can earn 10% annually on investment. how much should you invest at the end of each of the next 10 years to be able to buy that house?
A calculator with an exponential function (or an Excel spreadsheet) is very helpful for solving this kind of problem. In 10 years the house will cost 125000*(1.05)^10 =203612.
Solve for X where X*(1.10)^10 = 203612. I get 78501.