Use calculator or discount tables (given with teaching slides). Write the steps (reasoning) of calculation.

1. Ali wants to buy a house in another seven years. The type of house he wants to buy is currently selling for OR 50,000, and the price will increase at a compound rate of 10% per year. Ali can presently invest in a bank fixed deposit earning a compound annual rate 14% per year. How much money must Ali deposit in the bank each year to be able to purchase a house in seven years from now?

2. Covid-19 virus has created health uncertainties. You could buy an health insurance for yourself against potential Covid viral infection by paying OR 24 every year or, you may buy a lifetime insurance for a onetime payment of OR 400 today. Using a discount rate of 5%, how many years does it take to make the lifetime subscription the better option compared to yearly payments?