Federica has recently seen a small house in Cape Town that she would like to buy. She thinks that it will be perfect for a new business: renting out rooms to tourists from Europe in the summer season. The house costs R4.5 million. Federica would like to borrow this money from her parents and repay them R4.5 million in ten years time. Federicas parents burst into laughter when she suggests this deal and told her that it is not a good way to invest their pensions.

1. Argue why Federicas parents believe that this is not a good way for them to invest their pension. (10