Problem 1

1) After researching various term deposit products, you have found that you can deposit your money in either Commonwealth Bank or Westpac Bank. Commonwealth Bank is offering a deposit rate of 10.5% compounded monthly, while Westpac Bank is offering 11% compounded quarterly. Which bank offers the better rate?

2) You would like to have $100,000 in 10 years time. To achieve your target, you plan to invest equal amount of money each year in the stock market. Assume the return from the stock market is 10% per year. Your first payment will be made immediately. How much should you invest annually?

3)Ten years ago, you took out a $300,000, 30-year mortgage loan to finance your house purchase. The interest is 6%, compounded monthly, and the monthly payment is $1,800. What is the outstanding balance on your current loan immediately after you make the 120th payment?