Question One: Saving for a house deposit (5 marks) As part of your investment plan, you have set the goal of buying a $1,200,000 property in 7 years.

a. You assume that the bank will require you to deposit 30% of the house price and approve your mortgage loan of 70% of the house price. What is the amount of deposit you must have in 7 years?

b. If you currently have no savings and you want to be able to have just enough to pay the deposit calculated in part (a) in 7 years, how much do you have to save monthly into your bank account that pays 5% annual interest rate, compounded monthly?

c. Suppose instead you currently have a saving of $45,000 in the bank earning an annual interest rate of 5%, compounding monthly. In addition to this saving, you plan to save more periodically by depositing cash into your bank account that also earns 5% annual interest rate, compounded monthly. How much do you need to contribute monthly to attain your saving goal (the amount of house deposit)?