Answer Happy

Assignment 1 Suppose Arya is an entrepreneur. She is planning to set aside funds for the next eight years in order to make a down payment on her own house. After considering the various apartments of Dhaka, Arya chose Dhanmondi as her desired future residency. Based on going price, she learned that a two-bedroom, two-bath house currently costs $88,000. She wanted to make a down payment of 20%. Because it will be eight years after she buys a house, the $88,000 price will surely not be the same in the future. To estimate the rate at which the median house price will increase, she considered the historical price appreciation in Dhanmondi. In the past, homes appreciated by nearly 4% per annum. Arya was satisfied with this estimation. IDLC provides several opportunities for Arya to invest the funds that will be devoted to the purchase of her future home. She feels that a balanced account containing stocks, bonds, and government securities would realistically achieve an annual rate of return of 8%. Case Questions: 1. Taking into consideration the fact that the $88,000 home price will grow at 4% interest) per year, what will be the future home selling price in Gulshan in eight years? What amount will Arya have to accumulate as a down payment if she does decide to buy a house in Gulshan? 2. Based on your answer from number 1, if Arya decides to make end-of-the-year deposits into the Lanka Bangla for the down payment, how much would these deposits be? 3. How much will have to be deposited into IDLC's account at the end of each month to accumulate the required down payment? 4. If homes in Dhanmondi appreciate by 6% per annum over the next eight years instead of the assumed 4%, how much would Arya have to deposit at the beginning of each year to make the down payment? 5. If instead of saving in a deposit Arya can also save this money by purchasing debt security with eight years maturity which will give a 7% quarterly return instead of an 8% annual return given by the deposit. Which of the alternative should be picked by Arya for saving the money of the down payment?