Task $2$:

Given the home deposit needed in the future, they also task you with finding a good investment to help them save.

Find and present in your business report, the best $($highest EAR$)$ term deposit available in the market. Evidence of your product comparison is required.

Bob and Jill have the following conditions for the term deposit you present to them:

$($if you breach the conditions below, $-2$ marks will be deducted for each breach$)$

The term deposit is restricted to be from a Big $4$ bank only

The final term of the deposit has to mature when they purchase the house in the future. Deposits of mutiple and different terms can be used to reach period when the deposit is required.

Interest to be calculated and paid as specified by the product. $($i$.$e$.$ quarter or annual interest payments etc$)$

To invest today, they have $$95,000$ to investment today

a$)$ Given the money they have available to invest today, apply financial math and calculate the future value of investing in your recommended term deposit,

for when they need to buy their house. $($show your Excel working, missing working will result in a $-4$ mark penalty$)$

$0$

b$)$ Do they have enough now, to pay for the home deposit required in the future? If yes, by what percentage are they over their deposit.

If not, by what percentage are they under their deposit?

Teams need to present the results of all tasks in a Business Report format to the clients.

Further to Task $1$ and Task $2,$ in your report conclusion and executive summary, provide recommendations$/$solutions about what the clients can do if they either cannot afford or can afford the property.

In the conclusion, also discuss the limitations of your analysis$/$calculations and suggest how it can be made more realistic for future forecasts of product interest rates.

Feel free to see staff in consultation about guidance regarding how to think creatively and how to provide value$-$add recommendations.

Completing Task $1$ & $2$ only, with insufficient recommendations and limitations discussion will earn at most a Credit mark. Bob and Jill have hired your team of financial planners to consult on their intention to buy their next home. There are $2$ financial hurdles to meet, not meeting either will mean they cannot make their purchase.

'Task $1$: Can they afford the loan repayments? Task $2$: Will they have a sufficient deposit?

In $3$ 'years time, they intend buy a $3$ bedroom house in Caulfield to live. They intend to spend

$$1,340,000$ to buy their house.

Task $1$:

'Find and present in a business report, the cheapest $($lowest interest rate$)$ home loan in the current market $($assume current rates will apply in the future$).$ You are required to show evidence of your

comparison. No evidence of comparison will result in a $-2$ mark penalty. Evidence would be comparing your recommendation with at least two other loan products which also match all the conditions below.

The couple have the following conditions and needs of the home loan they will borrow:

$($not following the conditions given above or below will result in $-2$ marks deducted for each condition breached. Conditions are given in RED font$)$

The loan has to be from a Big $4$ bank only

The loan needs to have a Offset facility

The couple wish to make monthly repyaments

$($assume all loans researched allow for this repayment$)$

The loan term is to be $30$ years

They wish to take a partly amortising, $5\%$ loan balance at maturity

They are interested in a $2$ year Fixed rate loan

$($assume all loans researched can be fully or partly amortising$)$

The clients want an LVR of $60\%$

$($use comparison rates to identify the best loan, use the nominal interest rate for repayment calculations.$)$

$($ensure the maximum loan LVR allows for the target here$)$

a$)$ Applying their desired LVR$,$ Calculate the amount Mr and Mrs Monash has to borrow.

b$)$ Calculate the deposit Mr and Mrs Monash must contribute in the future.

c$)$ Apply financial math to calculate the periodic loan repayment Mr and Mrs Monash must pay.

$($show your Excel working, missing working will result in a $-4$ mark penalty$)$

d$)$ Today, the clients have a combined total of $$2,800\mathrm{.}00,\text{'}$of disposable income to service their debt at each loan repayment period.

'Assuming, their income increases by the current rate of annual inflation, will they be able to afford the periodic loan repayment needed for the loan?

If not, by what nominal annual percentage will they have to grow their disposable income available to service the loan in the future when they buy their house?

If their future income is greater than the loan repayment required, by what percentage is their income greater than the loan payment required?