Chris wants to purchase an apartment within five years (refer Case Study). Undertake a financial assessment of this objective and comment on whether or not it is achievable.

In your response address three issues:

- the financial capacity to undertake the necessary savings plan for five years for the deposit;

- the financial capacity to service the bank loan (interest only); and,

- the financial capacity to service the bank loan (interest and principal)

The interest on the deposit savings account is 2% and the interest on the bank loans is 4% and the repayments on the bank loans are on a monthly basis.

The term of the interest and principal bank loan is 20 years.

700,000

appartment cost 700,000