## Answers

**a)**

**The money required for the down payment and closing costs = 0.15 x $ 250,000 + 0.04 x $ 250,000**

**The money required for the down payment and closing costs = $ 47,500**

**Using the future value of investment equation, we can calculate the time when there will be enough money for the down payment and closing costs.**

**Taking natural log on both sides of the equation**

**n = 4.51 years**

**Thus in 4.51 years, there will be enough money for the down payment and closing costs.**

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**b)**

**To buy the house in 3 years, the money to be saved each month for the down payment and closing costs is calculated as follows**

**The value of A is the amount to be saved each month to achieve the goal in 3 years**

**A = $ 1,189.58**

**Thus to buy the house in 3 years, a savings of $ 1,189.58 has to be made each month.**