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You are opening a savings account that pays fortnightly interest at a rate of j26 = 2.3% p.a. You wish to save $55,000 for a

You are opening a savings account that pays fortnightly interest at a rate of j26 = 2.3% p.a. You wish to save $55,000 for a mortgage deposit by depositing the same amount into the account at the end of each month, for 2.5 years, starting in a months time. Determine the required size for the fortnightly deposit, R. Apply a sanity check. Construct a sinking fund table for the last five deposits. (Ensure you show how you obtained your starting value for the table.) Describe and apply a sanity check to your table. Suppose that immediately after your 25th deposit, the interest rate rises to j26 = 2.6% p.a. Determine the size of the promises you must make in fortnight 25 and onwards in order to make your target of $55,000 still. With the new interest rate j26 = 2.6% p.a, construct a new sinking fund table for the last five deposits. (Ensure you show how you obtained your starting value for the table.) Describe and apply a sanity check to your table.

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