Q.1 Review the financial capacity of Fiona and Waleed to service the new loan as proposed by the bank. In your response make sure you take into consideration the period that Waleed will be on extended leave. (4 marks)

Fiona and Waleed would like to buy a house in the next few years. The market price for a suitable house is approximately AUD1.8 million. The bank has suggested the best approach would be to sell the apartment (for approximately AUD0.8 million), repay the existing bank loan of AUD0.6 million and use the surplus proceeds of AUDO.2 million as the deposit on the house. On this basis the bank indicated it would likely approve a new loan of AUD1.6 million to purchase the house. The new loan would be interest plus principal, monthly repayments, an interest rate of 5% and a term of 25 years