1. Luke borrows $750,000 from ANZ to set up a medical practice. He agrees to pay a fixed interest rate of 12% per annum compounding monthly and to repay by equal monthly instalments over 30 years. Calculate the monthly repayment and the remaining loan after making 36 monthly repayments.

a. The monthly repayment is $7,714.59 and the outstanding is $740,755.94 after making 36 monthly repayments.

b. The monthly repayment is $107,103.02 and the outstanding is $776,461.59 after making 36 monthly repayments.

c. The monthly repayment is $7,714.59 and the outstanding is $776,461.59 after making 36 monthly repayments.

d. The monthly repayment is $107,103.02 and the outstanding is $780,461.59 after making 36 monthly repayments.

2. A pine plantation returns nothing to its owner in the first 3 years. In the following 2 years, the returns are $100,000 (year 4) and $150,000 (year 5), respectively, and then the return is $200,000 per year in perpetuity from year 6 onwards. The returns can be invested at 8% per annum.  What is the present value to the owner (the value in year 0)?

a. The present value to the owner is $2,189,389.32.

b. The present value to the owner is $2,027,212.33.

c. The present value to the owner is $2,364,540.47.

d. The present value to the owner is $1,877,048.46.