3 years later at 25 years old, George succeeded with his investment goals. However, his plans have changed due to meeting the love of his life, Stephanie Gerrard. They decided to purchase a property together. Like George, Stephanie also invested successfully. Together, they have combined cash of $220 000, and they would like to allocate $130 000 as deposit for their first home, with the rest of the money gradually invested into bonds and shares. George and Stephanie have decided to purchase a house in Epping to live in for $1 300 000. In order to fund the purchase, George has arranged an 90% loan from the bank, which they will pay off on a monthly basis over a 30-year period. The interest rate on the loan is 2.55% p.a.
3 years later at 25 years old, George succeeded with his investment goals. However, his plans have changed due to meeting the love of his life, Stephanie Gerrard. They decided to purchase a property together. Like George, Stephanie also invested successfully. Together, they have combined cash of $220 000, and they would like to allocate $130 000 as deposit for their first home, with the rest of the money gradually invested into bonds and shares. George and Stephanie have decided to purchase a house in Epping to live in for $1 300 000. In order to fund the purchase, George has arranged an 90% loan from the bank, which they will pay off on a monthly basis over a 30-year period. The interest rate on the loan is 2.55% p.a.
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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Question
6) Stephanie suggests to George that they can reduce the amount of interest they pay
over the life of the loan by simply making his monthly repayments at the start of
each month rather than at the end. Is Stephanie correct? Explain why/why not
using calculations to prove your response.
please Show formula, variables, calculations and a concluding statement in your response.
Transcribed Image Text:3 years later at 25 years old, George succeeded with his investment goals. However, his
plans have changed due to meeting the love of his life, Stephanie Gerrard. They decided to
purchase a property together. Like George, Stephanie also invested successfully. Together,
they have combined cash of $220 000, and they would like to allocate $130 000 as deposit
for their first home, with the rest of the money gradually invested into bonds and shares.
George and Stephanie have decided to purchase a house in Epping to live in for $1 300 000.
In order to fund the purchase, George has arranged an 90% loan from the bank, which they
will pay off on a monthly basis over a 30-year period. The interest rate on the loan is 2.55%
p.a.
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