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Mandy and Andy are about to get married, but they want to buy their own house - NSC Mathematical Literacy - Question 1 - 2016 - Paper 2
Question 1
Mandy and Andy are about to get married, but they want to buy their own house. They are interested in buying the house shown below. The price of the house is R 0,98 ... show full transcript
Worked Solution & Example Answer:Mandy and Andy are about to get married, but they want to buy their own house - NSC Mathematical Literacy - Question 1 - 2016 - Paper 2
Step 1
Step 2
Mandy and Andy are going to apply for a home loan of 110% to cover for the home loan and all other additional costs. Calculate how much money they will borrow from the bank.
Answer
The amount they will borrow is calculated as:
[ R 0,98 \text{ million} + 10% \times R 0,98 \text{ million} = R 1,078 \text{ million} ] Thus, they will borrow R 1,078 million.
Step 3
Why do you think that this couple see this house as an ideal place to buy?
Answer
This couple may see this house as an ideal place to buy because it has a large kitchen and living space, proximity to essential services such as schools and hospitals, and the additional features of the property such as garages and a fenced area add appeal for family living.
Step 4
Based on the amount that they are going to borrow from the bank, calculate the following:
Answer
Monthly Repayment
Using the formula:
[ \text{Monthly repayment} = \frac{1,078,000}{1 000} \times 8,41 = R 9,065.98 ]
Real cost at the end of the loan period
Calculating the total payment over 30 years:
[ R 9,065.98 \times 30 \times 12 = R 3,263,752.80 ]
Interest that they will pay on the loan:
[ R 3,263,752.80 - R 1,078,000 = R 2,185,752.80 ]
Step 5
Step 6
At the same interest rate, the longer the loan period, the smaller the factor value which imply that the monthly repayment will be less and the real cost will be higher.
Answer
This statement is accurate because while longer loan periods typically reduce the monthly payment amount, they also increase the total interest paid over the duration of the loan, resulting in a higher real cost.
Step 7
Currently in South Africa, the interest rate is on the increase. Comment by making a comparison how a change in the interest rate will have an impact on the monthly repayment if a loan of the loan period is 15 years at an interest rate of 12%, 12.5% and 13%.
Answer
In general, an increase in the interest rate will lead to higher monthly repayments. For example, if the repayment factor increases as the interest rate increases, this will make the monthly repayments more expensive, which could influence the affordability of the loan.
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Step 11
Why do you think that the 10th percentile graph has a different shape than the other percentile graphs?
Answer
The 10th percentile graph differs in shape likely because it represents lower-priced homes, which tend to have more volatility and are affected by different market dynamics compared to higher-priced homes represented by other percentiles.
Step 12
Due to inflation, prices of all services and goods increase annually. Predict, with the necessary calculations, what the new price of a house will cost in 2017 if the inflation rate remains constant at 6,6%.
Answer
Using the 70th percentile price for 2015, applying the inflation rate:
[ \text{New price in 2017} = R 1,279,200 \times 1.066 = R 1,363,627.20 ] Thus, the predicted price will be R 1,363,627.20.