Please answer using P/F,P/A,P/G
You have just graduated from College and you have an excellent job as an engineer. You decide to move back home for 2 years so that you can save for a down payment on your place. Because you are at home, you are able to save $2000 per month in an interest bearing account earning 3%. At the end of the two years, you will buy a place of your own. You will be able to continue to pay $2000 a month but from that money you must pay your mortgage payment; $350 in groceries, $200 in utilities (electricity, water and phone/internet); and $500 in taxes and insurance. Assume the mortgage interest rate is 6% annually and it is compounded monthly.
a Draw the cash flow diagram for this problem from the banks perspective. You do not need to include the groceries, utilities or taxes.
b How much money will you have available for the down payment at the end of two years?
c How much of a mortgage payment will you be able to afford?
d What is the maximum purchase price that you can afford?