You are thinking of buying a condo at the beach when you retire in 20 years. The average price for the house you want is $175,000 today.
A.) How much would you need to deposit today (as a lump sum), to pay cash for the house if the house price increases at the rate of 5% per year and you can earn 12% on your investment?
B.) How much would you need to at the end of each year, to pay cash for the house if the house price increases at the rate of 5% per year and you can earn 12% on your investment?