a,b,c
1. Mr. D is a social worker. He lives with his wife in a village in New Territories. He has an outstanding fixed mortgage payment of $15,000 per month for 5 years. The interest rate is fixed at 5% p.a. He wishes to advance his mortgage payment by two years by paying a lump sum. Mr. and Mrs. D have a 10-year old daughter. They wish to send her daughter to a UK university for 4-year study in 8 years' time. It is expected to cost $250,000 for every 6-month in present value terms. He intends to make an initial contribution of $800,000. After that, he believes he can make $3,000 regular contribution for every 6-month (starting at t = 0.5) while he is paying the mortgage. This contribution is expected to grow with an inflation rate of 3%. After repayment his mortgage in 3 years' time, he believes he believes he can make an extra contribution of $7,500 per month (or $45,000 for every 6- month (starting at t = 3.5). Again, this contribution is expected to grow with inflation rate. a Assume there are no extra interest and handling charges, what will be the amount he needs to repay the bank if he wants to repay all his mortgage by 2 years? (6 marks) Hints: PV Aordinary = $(1- utry) where c, r and t are periodic payment, periodic interest rate and number of periods respectively. It is PVA Ordinary that a mortgagor owes to a bank at any time. ..[Answer the question on a plain A4 paper)....... Show all the steps and write your answer to the relevant box of pan e))...... BRE b. Estimate Mr. D's daughter education expenses at t = 8. 8.5. .... and 11.5. (4 marks) ....(Answer the question on a plain A4 paper).. Show all the steps and write your answer to the relevant box of part el....... e. Estimate Mr. D regular contributions while he is still payment the mortgage at 10.5.1 and 3 marks) 1. Mr. D is a social worker. He lives with his wife in a village in New Territories. He has an outstanding fixed mortgage payment of $15,000 per month for 5 years. The interest rate is fixed at 5% p.a. He wishes to advance his mortgage payment by two years by paying a lump sum. Mr. and Mrs. D have a 10-year old daughter. They wish to send her daughter to a UK university for 4-year study in 8 years' time. It is expected to cost $250,000 for every 6-month in present value terms. He intends to make an initial contribution of $800,000. After that, he believes he can make $3,000 regular contribution for every 6-month (starting at t = 0.5) while he is paying the mortgage. This contribution is expected to grow with an inflation rate of 3%. After repayment his mortgage in 3 years' time, he believes he believes he can make an extra contribution of $7,500 per month (or $45,000 for every 6- month (starting at t = 3.5). Again, this contribution is expected to grow with inflation rate. a Assume there are no extra interest and handling charges, what will be the amount he needs to repay the bank if he wants to repay all his mortgage by 2 years? (6 marks) Hints: PV Aordinary = $(1- utry) where c, r and t are periodic payment, periodic interest rate and number of periods respectively. It is PVA Ordinary that a mortgagor owes to a bank at any time. ..[Answer the question on a plain A4 paper)....... Show all the steps and write your answer to the relevant box of pan e))...... BRE b. Estimate Mr. D's daughter education expenses at t = 8. 8.5. .... and 11.5. (4 marks) ....(Answer the question on a plain A4 paper).. Show all the steps and write your answer to the relevant box of part el....... e. Estimate Mr. D regular contributions while he is still payment the mortgage at 10.5.1 and 3 marks)
