[Unique Solution From 10/Pg] Intends Putting Money Aside

JD recently graduated from Damelin and is currently doing his internship. He wants to buy a Golf TDi (or similar) in five years’ time. The vehicle is currently valued at R280,000 but with inflationary expectations at 6% he expects the vehicle to cost somewhat more when he purchases the vehicle. He wants to put down a deposit of 35% at purchase date and intends putting money aside towards the deposit. A bank is willing to offer him 8% pa compounded monthly on any savings. He expects that ABSA Vehicle Finance to offer him favourable terms of 11.5% pa compounded monthly over five years to cover his repayments. Required: 1) What amount does he expect to put aside each month to pay off the deposit? 2) What would his expected repayments be to pay off the loan?

 

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