You are 20 years old today, and decide to start saving for the purchase of your first home. The current average house price in Brisbane is $500,000, and assume it will increase by 3% every year. Your goal is to be able to purchase an average house in Brisbane when you are 30 years old. The deposit required for the house is 20% of the house price (assuming you are borrowing for the remaining amount). You plan to deposit the same amount at the end of each year, starting one year from now (your 21st birthday) and ending on the day of your 30th birthday. The money will be deposited in an account paying 5%p.a. compounded annually.

a. Which constant annual amount do you need to deposit in your account to fund your purchase? (3 marks)

b. Which constant annual amount do you need to deposit in your account if you start the first deposit immediately (assuming your last deposit still ends on the day of your 30th birthday).