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suppose that you have just celebrated your 18th birthday today. You decide to start saving money...

suppose that you have just celebrated your 18th birthday today. You decide to start saving money to purchase your first home in 12 years, which will cost $650,000. You aim to save sufficient money to pay the 15% initial deposit, and will take a mortgage to cover the 85% of property cost. The nominal interest rate for the savings account is 13% per annum compounded fortnightly. The nominal interest rate charged by the mortgage provider is 6% per annum compounded monthly.

  • Option 1: The mortgage will be repaid over 20 years by equal fortnight-end-instalments.

c) Calculate the fortnightly repayment.

d) Calculate the interest component for the 24th repayment.

e) Calculate the mortgage outstanding balance immediately after the first 200 payments. (1 mark)

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