Now that they have accumulated a deposit of $80,000, Ed and his partner Susie wish to use the deposit and take out a housing loan to purchase a home. The house costs $720,000. The loan is to be repaid in equal monthly instalments over a term of 30 years.Ed recalls that the interest rate quoted by the bank is an annual nominal rate of 6.5%pa.Ed has misplaced the paperwork showing the annual effective rate, so you may need to work this out. Interest is added monthly. They would like to know:

i.How much is the monthly repayment?

ii.How much interest will be paid in the first year?

iii.How much would Ed and Susie owe the bank immediately before making the 120^th repayment?

iv.Provide Ed and Susie with a repayment schedule using excel.

(Answers should be accurate to the nearest dollar)

Question 2

Karine and Arlo are trying to establish a University Fund for their daughter Amelia, who turns 2 today.They plan for Amelia to withdraw $12,000 on her 18^th birthday and $13,000, $14,000 and $15,000 on her subsequent birthdays (19^th, 20^th and 21^st).They wish to deposit money into an account so that, with interest it will build up enough to make the planned withdrawals.They wish to make ten equal annual deposits, and they intend to make their first deposit one year from today, and expect to earn an average return of 6.55%pa on the account.

i.How much will Karine and Arlo have to deposit each year to the account to achieve their goal?

ii.Create a schedule showing the cash inflows (including interest) and outflows of this fund.How much will be in the fund on Amelia's 16^th birthday?

(Your answers should be accurate to the nearest dollar)