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(e) Integrated Time Value of Money problem You plan to set aside an equal amount at the start of each fortnight for the next three

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(e) Integrated Time Value of Money problem You plan to set aside an equal amount at the start of each fortnight for the next three years to buy a house. You expect to earn an interest rate of 6.5% p.a. compounding fortnightly. The price of a three-bedroom house in Brabham currently averages at $420,000. Property market analysts forecast prices in the suburb will grow at a rate of 2% p.a. over the next few years. You hope to use the accumulated funds as a deposit for a home loan. Suppose that a bank will lend you the balance needed for the purchase (minus the deposit). You expect the interest rate on your home loan to be 7.8% p.a. compounding weekly. You play to repay your home loan over a 25-year period on a weekly basis. You determine that you can afford to repay $700 at the end of each week over the term of your home loan. How much should you set aside at the start of each fortnight for the next three years in order to save for the deposit needed to service the home loan under the conditions stated

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