You have started your first job today, and you want to buy a house within 4 years. You ar
You have started your first job today, and you want to buy a house within 4 years. You are currently saving for the down payment. You plan to save $4,000 the first year. You also anticipate that the amount you'll save each year will rise by 15% per yearasyour salary increases over time. Interest rates can be expected to remain at 5% during these upcoming 4 years, and all savings occur at year-end. How much money will you have for a down payment in four years? 12. You are indecisive about which stock to buy: ABC, which is selling for $47 a share: or XYZ, which is selling for $35 a share. ABC stock promises to pay annual dividends of $2.00, $2.50, $3.00, and $3.50 over the next four years, respectively, and you estimate it can be sold for $60 at the end of the fourth year. XYZ will not pay any dividends the first two years, but will pay 50 cents in annual dividends in the two years after that and is expected to be selling for $45 in four years. Which stock would you buy if stocks from this industry typically yield 10% per year?