Dave Bidini Has Saved $20,000 for a Down Payment on a Home

question 212

Short Answer

Dave Bidini has saved $20,000 for a down payment on a home and plans to save another $5,000 at the end of each year for the next five years. He expects to earn 7.25% compounded annually on his savings. How much will he have in five years' time? (Taken from CIFP course materials.)

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Definitions:

Current Ratio

A financial metric assessing a firm's capacity to meet its short-term debts due within a year, determined by dividing its current assets by its current liabilities.

Company

A legal entity formed by a group of individuals to engage in and operate a business enterprise.

Working Capital

The difference between a company's current assets and current liabilities, indicating the short-term financial health and operational efficiency of the business.

Company

An organization created by several persons for the purpose of running and operating a business activity.