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Kit and Jo are considering two possible alternatives sell their home and buy a larger house for AUD4.0 million, or, keep their home and build

Kit and Jo are considering two possible alternatives sell their home and buy a larger house for AUD4.0 million, or, keep their home and build a major extension for AUD1.5 million. Funding for either alternative will involve increasing their existing home loan. Assess and compare the financial viability of these two alternatives (assume the bank loan is interest only with an interest rate of 5.0% per annum).

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