THE URL FOR THE CALCULATOR IS: https://www.infochoice.com.au/calculators/borrowing-power-calculator/

1. GIVE A BRIEF DESCRIPTION OF HOW A LENDER MAY DECIDE THE SIZE OF AN AMORTISING LOAN THEY WOULD MAKE TO A BORROWER FOR BUYING REAL ESTATE. THIS CAN BE COMPUTED USING THE EXCEL PV FUNCTION. WHAT WOULD BE THE INPUTS TO THE EXCEL PV FUNCTION? (2 MARKS)

2. GIVE A BRIEF DESCRIPTION OF WHAT THE CALCULATOR PRODUCES? (3 MARKS)

3. THERE ARE VARIOUS ASSUMPTIONS BUILT IN TO THE CALCULATOR. TO VIEW THESE, CLICK ON THE "ASSUMPTIONS" LINK. THESE HAVE DEFAULT VALUES BUT THE USER CAN CHANGE SOME OR ALL OF THESE VALUES. WHAT ARE THESE ASSUMPTIONS? IDENTIFY THEM. HOW REASONABLE ARE THE FOLLOWING ASSUMPTIUONS?

A. INTEREST RATE BUFFER.

B. MAX % OF AVAILABLE INCOME.

C. LENGTH OF MONTH, NUMBER OF WEEKS AND FORTHNIGHTS IN A YEAR. (8 MARKS)