Question
In the past seven years, Sarahs uncle has been paying her monthly allowance of $1,000 in arrear, directly deposited into Sarahs bank account, with an
In the past seven years, Sarahs uncle has been paying her monthly allowance of $1,000 in arrear, directly deposited into Sarahs bank account, with an interest rate of 5% p.a. compounded monthly. Today, Sarah decides to use the accumulated sum of the monthly allowances her uncle pays for a cash down payment to buy a house. Sarah is currently prepared to pay up to $1,500 at the end of each month for a 20-year mortgage, and her bank is currently charging 3% p.a. interest, compounded monthly. What is the maximum house price Sarah can afford?
a.
$30,458.22
b.
$370,795
c.
$1,234,803
d.
$351,607
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