You are working as a personal financial adviser. Alecia, one of your clients approached you for consultation about her p
Posted: Sat Nov 27, 2021 5:18 pm
You are working as a personal financial adviser. Alecia, one of
your clients approached you for consultation about her plan to buy
her dream house that costs $400,000. Alecia has a saving of
$100,000 and is considering two alternative options:
Investment 1: Investing that $100,000 in an
investment that would pay a rate of return of 9% annually,
compounding semi-annually for 15 years.
Investment 2: Buying her dream house now. Then
Alecia needs to borrow $300,000 mortgage from Prosperity Bank. The
current interest rate the bank offered for the new mortgage is 4%
annually, compounding monthly. The standard life of mortgage in
Australia is 30 years.
Required:
your clients approached you for consultation about her plan to buy
her dream house that costs $400,000. Alecia has a saving of
$100,000 and is considering two alternative options:
Investment 1: Investing that $100,000 in an
investment that would pay a rate of return of 9% annually,
compounding semi-annually for 15 years.
Investment 2: Buying her dream house now. Then
Alecia needs to borrow $300,000 mortgage from Prosperity Bank. The
current interest rate the bank offered for the new mortgage is 4%
annually, compounding monthly. The standard life of mortgage in
Australia is 30 years.
Required: