[Solution] 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.
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?