In 14 years you are planning on retiring and buying a house in Oviedo, Florida. The house you are...

Question:

In 14 years you are planning on retiring and buying a house in Oviedo, Florida. The house you are looking at currently costs $110,000 and is expected to increase in value each year at a rate of 2 percent. Assuming you can earn 11 percent annually on your investments, how much must you invest at the end of each of the next 14 years to be able to buy your dream home when you retire? a) If the house you are looking at currently costs$110,000 and is expected to increase in value each year at a rate of 2 per cent, what will the value of the house be when you retire in 14 years?

Retirement Plan:

Retirement is a compulsory process in our life cycle. In order to meet out our necessities after retirement, we have to accumulate part of our income in any investments.

Those investments can be used for the purchase of a house, a car or for our retirement life. Here, investing the amount annually to buy a house in the future.

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a) Calculation of the value of the house after 14 years:

Present value of the house = \$110,000

The expected increase in value each year = 2%

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Sources of Income in Retirement

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Chapter 29 / Lesson 5
6.8K

In this lesson, learn several key ways that older adults pay their bills after retiring from work. You'll see how people can have different experiences in funding their retirement.