Ms. Francine is working hard every day. She has been saving every month for 5 years an amount per month that represents a total sum of $92,600. Now she is planning her future, but she is still deciding what to do. When she started working, she didnt have a specific plan, but she has always dreamed of having a house in the valley.

Question 1

With her current savings, Ms. Francine is planning to buy the house within the next 8 years. Considering that its market price will rise up to $180,000, and the current market rates are around an annual 7,5%, calculate each of the following investment options and explain which is more attractive based on those calculations. Please show your workings for each option.

a) Investing all her savings in a product that offers an annual 11% simple interest for 8 years.

b) Investing part of her savings in a product that offers an annual interest of 9% compounded quarterly for 8 years to produce $180,000.

c) Investing all her current savings in a project that will produce annual cashflows of $22,500 for 8 year