Loan information

Deposit: $8\%$

Interest rate: Prime $+2\%$

Loan period $20$ years

$($Assume the prime rate is $9\%)$

$2\mathrm{.}2\mathrm{.}1$ Calculate the real cost of the house with the given

information above. Make use of the factor table in

question $2\mathrm{.}1$ where factor values are needed. You may

use the following formula to guide you in your

calculations.

Deposit

Loan amount$=$ house price $-$ 'deposit

Monthly repayments $=$ interest rate $=$ prime $+2\%$

$($get factor for interest from factor table above

Loan length $20$ years

Repayment $=$ loan amount $1000$ factor

Real cost $=$ Monthly repayment amount $x$ number

of repayments made.

$2\mathrm{.}2\mathrm{.}2$ If the buyer had to pay a $15\%$ deposit instead of $8\%$ what

effect would this have on the real cost of the loan? $($Show

all calculations and remember to state the effect on real

cost of loan.$)$

QUESTION $3($PERSONAL INCOME TAX$)$

James works in a clothing factory where he earns a gross

salary of R$12500$ a month. The monthly deductions from his

salary are as follows:

Pension: $12,5\%$ of his salary

Medical Aid: James, his wife and two children are covered by

his medical aid

UIF: $1\%$ of his salary