Question 1: Your family business plans to buy a new building for AED 10,500,000. Emirates NBD offers you a 30-year loan with equal monthly payments and an interest rate of 5,5% per year. The bank requires that your firm pay 20% of the purchase price as a down payment. This means that you can borrow only 80% of the building value. Today, you have only AED 25,000 in your savings account, and Emirates NBD can give you 2% return per year on your savings. (a) Why do you think banks normally require any borrower to pay 20% of the purchase price as a down payment? (b) Demonstrate the importance of the effect of compounding by estimating the amount you would have saved with your savings after 30 years. (c) If instead of paying the loan over 30 years, you decide to pay it completely over 15 years, would your monthly payment double? Show your workings. Question 2: You plan to have AED 5 million when you retire, 10 years from today. (a) If your most preferred bank gives you an interest rate of 2.5% every month, how much do you need to invest every month in your savings account to retire with the AED 5 million in 10 years? Assume your first payment in your account will be made in 1 month (b) If your most preferred bank gives you an interest rate of 0.75% every week, how much you need to invest every week in your savings account to retire with the AED 5 million in 10 years? Assume your first payment in your account will be made today