Question 1.a (15 marks)

Ingrid has requested your advice in relation to her objective of purchasing a second apartment (as an investment) within two years.

In your response address two key issues set out below.

Issue 2: the financial capacity to service the bank loan (interest and principal)

The interest on the bank loan is 5% with monthly repayments and a term of 20 years. The net rental expected from the investment apartment is AUD2,250 per month (this is AFTER allowances for expenses and taxes but is BEFORE allowance for servicing the bank loan).

Ingrid has requested the following:

- the loan repayment amount per month (4 marks)

- the revised personal budget surplus per month (2 marks)