George has planned ahead and identified his dream house purchase in 3 years’ time. The current value of the house is $580 000. It is expected that the house will increase in value at a rate of 4.5% p.a. 3, Does the amount saved in part (ii) meet the 10% requirement from the bank as a deposit at the end of year 3? Show formula, variables, calculations and a concluding statement in your response.
George has planned ahead and identified his dream house purchase in 3 years’ time. The current value of the house is $580 000. It is expected that the house will increase in value at a rate of 4.5% p.a. 3, Does the amount saved in part (ii) meet the 10% requirement from the bank as a deposit at the end of year 3? Show formula, variables, calculations and a concluding statement in your response.
Chapter6: Business Expenses
Section: Chapter Questions
Problem 68P
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George has planned ahead and identified his dream house purchase in 3 years’ time. The current value of the house is $580 000. It is expected that the house will increase in value at a rate of 4.5% p.a.
3, Does the amount saved in part (ii) meet the 10% requirement from the bank as a deposit at the end of year 3?
Show formula, variables, calculations and a concluding statement in your response.
Transcribed Image Text:2) How much will George have saved after 3 years?
Show formula, variables, calculations and a concluding statement in your response.
Formula:
F=Dx(1+r)n-1r
Given:
F = Future Value=?
D = Monthly Deposits
=0.25×$80,000/12
= $1,666.67
r = Monthly Interest Rate = 0.0825/12 =0.006875
n = Number of Deposits =3×12 = 36 months
Calculations:
F =$1,666.67×(1+0.006875)36-10.006875
=$1,666.67x40.688741
= $67,814.70
Conclusion:
Therefore Total Savings $67 814 70
Transcribed Image Text:George is 22 years old and has recently completed a Bachelor of Commerce at A University. He has
decided to put his learnings into practice and wishes to commence his investment journey. He
completed two internships during his University years. As a result of his hard work, he secured a role
at PricewaterhouseCoopers earning $80 000 per annum after tax. Assume his income will stay the
same over the next 3 years. George's parents advised him to put all his money in property due to
their own success in the property market. However, George has decided he would like to invest in
BOTH shares and property.
George plans to use 25% of his salary after tax as savings for the deposit on his first home. He plans
to contribute all the savings to a micro-investing app at the end of every month for the next 3 years.
The investment is estimated to earn 8.25% p.a. compounding monthly.
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