You want to buy a property for $750,000 in 5 years time when you will need to put 20% of the price of

the property as a deposit. You intend to borrow the rest from a Bank.

a. If you have $91,050.00 now what annual rate of compound interest, compounded yearly, must be

earned on your investment to provide the desired amount? (Show answer as a percentage rate,

correct to 2 decimal places.) 2 Marks

b. Assume five years have passed and you have saved the required deposit. You are now investigating

home loans. Summer Bank is offering Rocket Home Loan that charges an interest rate of 4.9% pa

compounded monthly. Winter Bank is offering Premium Home Loan that charges an interest rate of

5% pa compounded quarterly and Autumn Bank is offering Flexi First Home Loan that charges an

interest rate of 5.1% pa compounded half-yearly. Explain which Home Loan you should choose.

(Show answer as a percentage rate, correct to 4 decimal places.)