Charlie wants to build a restaurant. The cost of the building is 516000, the fittings cost 55000. The bank will allow Charlie to borrow 370000, he will have to save the remaining amount required, He set up a bank account as a sinking fund and plans to make payments of 2100 a month which will offer 6.9% per annum compounded monthly.
i) Calculate the size of deposit Charlie would need to save. By how much will he fall short of his goal?
ii) Use the sinking fund formula on excel to find out the size of monthly payments Charlie should make in order to save the deposit amount in 6 years.
(iii) Charlie would like to use the original payment of 2100, he decides to find another financial institution for an interest rate that would enable the desired amount to be achieved. Determine the appropriate interest rate for an account offering monthly compounding and monthly payment of 2100 used in (i)
