PRINCIPLE OF FINANCE Q4

Question 4 a. Wajidun plan to get married next year. As a preparation he wanted to buy a comfortable house. He plans to save up enough money to put as a down payment on the new house in five years. He has read that the best way to purchase a house is with a 20% down payment. He has a large income and very little debt right now so he can afford to save a substantial amount of money every month. He is asking you for some advice to help him reach his goal. i. Wajidun just found a very nice house today that is currently selling for RM250,000. Based on an inflation rate of 5% in the local real estate market, calculate the house value in five years? (4 Marks) ii. Assume that Wajidun will need RM30,000 for his 20\% down payment in five years. Which of the following is closest to the amount that he will have to save every year in an investment that pays 11%, compounded semiannually? (4 Marks) iii. It is now five years later, and Wajidun has saved up enough money to make a 20% down payment on a new house. He will have to borrow RM135,000 at an annual rate 6% for 30 years, compounded monthly. What will his monthly payment be? (4 Marks) b. Natasha place RM 25000 in a savings account paying an annual compound interest of 8% for 3 years and then move into a saving account that pays 10% interest compounded annually. How much will Natasha have at the end of 6 years. (8 Marks) c. What is the time value of money and explain its importance from finance context