QUESTION 3

Starting a 5 year double degree at Monash, student services offers a choice between 2 ways of paying for your school fees.

The first choice is for a fixed payments of $30,000 paid at the beginning of each year for 5 years.

The second choice is for a first payment of $25,000 paid at the end of your first year, increasing by 7% each year till your final year.

Using a discount rate of 10% p.a., which should you choose and what is the cost of that choice?

I would prefer to the Choose... _______________ as it would cost ________________

QUESTION 4

You spend $40 on coffee a month but decide to cut that in half and put the savings into your internet bank account at the end of every month. You starting saving now so in a month, you have savings to invest. If your account earns 3% p.a., calculated and paid at the end of every month, what will your reduction in spending have accumulated to in 3 months from now?