Alex wants to open a restaurant in NYC. A business consultant approximated the cost of construction, interior design, necessary initial procurement of raw materials and equipment, and advertisement as $500,000 if the project begins immediately. After the discussion with the consultant and Goldman Sachs, Alex was able to get the preapproval of the loan with the required 20% down payment. At this time, however, Alex does not have the required down payment of $100,000 (20% of $500,000). The consultant suggests investing $2,000 per month in an annuity account that pays 3% compounded monthly until Kim has the necessary amount. Alex also noticed that there is an inflation of 1.2% across the industry, which implies that the cost of $500,000 will increase when Kim has the down payment from the annuity.

The following questions would be helpful to help Alex and give him an idea. Prepare the financial report to help Kim. (Assume that an inflation rate of 1.2% is accurate and compounded monthly.)

5. The loan manager of Chase Bank projected an interest rate of 3.8% for 30 years loan at the time Kim would borrow the money. If Kim borrows 80% of the total cost and amortizes the amount, what will be the monthly payment?