1(f) Abdul bought a house for £450,000. He put down a deposit of £150,000 and took out a mortgage repayable over 25 years for the balance. Under the terms of his mortgage Abdul has a variable rate of interest which is currently 4.1% APR. Assuming mortgage interest is calculated monthly and the variable rate does not change, estimate Abdul’s monthly mortgage payments using the formula:
A = P (i + i )
(1 + i)n – 1
2(g) Chris is 26 years old, employed, and saving up to buy a house. Chris needs to stay on track with his finances and has asked you to assist him to prepare a personal financial plan (i.e. a cash budget). He has supplied the following information to help you:
1. Chris earns an annual gross salary of £30,000. From this PAYE of £3,200, NIC of £2,564 and employee pension contributions of £1,500 are deducted for the year. Chris’ net salary (i.e. his take-home pay) is paid on the last working day of each month.
2. Chris makes a small amount of money by selling goods on eBay. Although the amount does vary month-on-month, for the purposes of the financial plan Chris believes that an estimate of £150 income per month is reasonable.