your daughter has expressed a wish to attend university when she finishes school in 3482731

Question 1 (show all workings 20 marks)

This question relates to material covered in the Topics 1 to 3. This question addresses the 5th and 6th subject learning outcomes. A thorough understanding of financial mathematics forms the basis of all learning in this subject.

For the following numerical problems, detailed worked answers must be shown. This involves providing a brief description of the problem, formulae used, progressive and final answers. For assignments you are expected to show your workings using the appropriate formula entered using the MS Word formula function.

(a) Your daughter has expressed a wish to attend university when she finishes school in five (5) years. You anticipate the cost will be \$60,000 at the time she commences university. If your financial institution is offering you 4% pa (compounded monthly), how much do you need to deposit in your account each month in order to save the required amount before your daughter commences university? (5 marks)

(b) You have been offered the opportunity to purchase a start up company building electric cars for the Australian market called Green Motors P/L. Your initial investment is \$22,000,000. The term of the project is 5 years. The project has an expected rate of return of 10% pa. All expected cash flows for the project are below and you have an expected rate of return of 10% pa.

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