Roland Trin received a graduation present of $20 000 that he is planning on investing in an investment fund, ABC Special Situations Fund, which earns 6% p.a. before fees, compounded every 2 months for a period of 3 years. The fund charges a fee of $100 at the end of each year for management which is subtracted from the fund balance at the time.

In addition to the graduation present, Roland wants to deposit a 6-monthly amount into a high interest cash account with Platinum Securities commencing 1 year from today for 4 payments in total. The account with Platinum Securities has a nominal interest rate of 8% and is compounded half-yearly for a 2-year term. At the end of the investment term there is a fee charged of $150 which is subtracted from the closing account balance.

Roland is looking to buy a car with the total proceeds from the 2 investments with ABC Special Situations Fund and Platinum Securities after 3 years. The car costs $49 000 before additional sales taxes equal to 6% of the purchase price.

Required:

1. How much must Roland deposit each year into Platinum Securities to be successful with his car purchase?
2. What will be the net amount that will come from ABC Special Situations Fund after 3 years to assist with the car purchase?

Group of answer choices

(1) $6 450.14,                  (2) $28 458.88

(1) $6 708.14,                  (2) $23 303.11

(1) $6 708.14,                  (2) $23 604.12

(1) $6 450.14,                  (2) $23 604.12

(1) $6 416.17,                  (2) $28 485.88

(1) $6 672.82,                  (2) $21 233.35

Answer rating: 100% (QA)

In the given case first we calculate future value of investment of 20000 made In the given rate inte... View the full answer