13. You have started your first job today, and you want to buy a house within 3 years. You are currently saving for the down payment. You plan to save $5,000 the first year. You also anticipate that the amount you save each year will rise by 10% a year as salary increases over time. Interest rates are assumed to be 7% and all savings occur at year end. How much money will you have for a down payment in three years?

Total amount = $17659.5

Explanation:

given data

time = 3 year

save = $5000

save each year = 10%

Interest rates = 7%

solution

first year saving  =  $5,000

second year saving = 5,000 + 10% = 5,000 × 1.10 = $5,500

third years saving  =  5500 + 10% = 5,500 × 1.10 = $6,050

so here

return on investment will be as on 1st year is at rate 7 %   for 2 year

amount =    ................1

put here value

Amount = 5000 ×      

amount = $5724.5

and

now we get return on investment will be as on 2nd year is at rate 7 %   for 1 year

put value in equation 1

Amount = 5500 ×  

Amount = $5885

so here Total amount is

Total amount = $5724.5 + $5885 + $6050

Total amount = $17659.5

cognitive overload: having a lot on your mind impairs decision-making and tends to result in the simplest, but not necessarily best, option being selected.

empathy gaps: overlooking how you might feel in a different situation can result in unnecessary purchases, such as overbuying when shopping for food on an empty stomach.

optimism and overconfidence: wearing rose-tinted glasses and having unrealistic expectations about the future can affect money management and leave you unprepared for a change in circumstance.

instant gratification: seeking instant gratification drives impulsive spending and can undermine long-term planning and savings.

harmful habits: automatic or mindless behaviour can amplify a poor financial decision as it becomes a recurring event.

social norms: we are heavily influenced by the actions of others; while this can be in certain circumstances, it also contributes to the pressure to keep up with the joneses through conspicuous consumption.

answer; capital structure decision;