An investor wishes to buy a house five years from now, which will expectantly cost $850,000 after five years. The invest

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An Investor Wishes To Buy A House Five Years From Now Which Will Expectantly Cost 850 000 After Five Years The Invest 1 (94.79 KiB) Viewed 34 times

An investor wishes to buy a house five years from now, which will expectantly cost $850,000 after five years. The investor will pay parts of this price from a personal deposit. The rest of the purchase price will be covered by taking two types of loans at the time of purchase: a 3-year fixed-interest personal loan of $35,000 a 25-year fixed-interest house loan for the rest of the house price (i.e., after paying from the personal deposit and the $35,000 taken as a personal loan at the time of purchase) Currently, the investor has $50,000 on deposit in a bank account, providing 2.2% p.a. interest compounded monthly. The investor will also deposit $2,000 monthly into this bank account from now until the time of the purchase after 5 years. The following information concerning loans are available from the bank: Loan Type Interest Rate Interest Compounded Loan Application Fee 25-year fixed interest house loan 3.5% p.a. Monthly $0 3-year fixed-interest personal loan 10% p.a. Semi-annually $250 The loan application fee will be added to the amount borrowed from the bank and the repayment of a loan will be based on the total amount borrowed inclusive of the respective loan application fee. Assume that this loan information will remain identical at the time of the purchase of the house after five years. For the loans, the repayment frequency per year will be the same as the frequency of interest compounding per year. Thus, for the 25-year house loan, the investor will repay at the end of every month; and for the 3- year personal loan, the investor will repay at the end of every semi-annum. Based on the above information, please answer the following: (a) Considering the current deposit already in the bank account and the plan to deposit regularly into the bank account for 5 years, how much money will the investors have as a personal deposit at the end of 5 years? [5 marks] (b) For the situations mentioned, what will be the amount the investor will take from the bank as a 25- year fixed interest house loan? [1 mark] (c) Determine the monthly repayment for the house loan. [3 marks] (d) Prepare an amortisation schedule for the personal loan. [6 marks) 0