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TASK 1:
CASE STUDY – REVIEW OF ONLINE BORROWING POWER CALCULATOR
FOR THIS EXERCISE WE PLAN TO ANALYSE / CRITIQUE / REVIEW AN ONLINE FINANCIAL CALCULATOR
THE URL FOR THE CALCULATOR IS:
https://www.infochoice.com.au/calculators/borrowing-power-calculator/
YOUR TASKS IN RELATION TO THIS ARE AS FOLLOWS
1. GIVE A BRIEF DESCRIPTION OF HOW A LENDER MAY DECIDE THE SIZE OF AN AMORTISING
LOAN THEY WOULD MAKE TO A BORROWER FOR BUYING REAL ESTATE. THIS CAN BE
COMPUTED USING THE EXCEL PV FUNCTION. WHAT WOULD BE THE INPUTS TO THE EXCEL PV
FUNCTION?
(2 MARKS)
2. GIVE A BRIEF DESCRIPTION OF WHAT THE CALCULATOR PRODUCES?
(3 MARKS)
3. THERE ARE VARIOUS ASSUMPTIONS BUILT IN TO THE CALCULATOR. TO VIEW THESE, CLICK ON
THE “ASSUMPTIONS” LINK. THESE HAVE DEFAULT VALUES BUT THE USER CAN CHANGE SOME
OR ALL OF THESE VALUES. WHAT ARE THESE ASSUMPTIONS? IDENTIFY THEM. HOW
REASONABLE ARE THE FOLLOWING ASSUMPTIUONS?
A. INTEREST RATE BUFFER.
B. MAX % OF AVAILABLE INCOME.
C. LENGTH OF MONTH, NUMBER OF WEEKS AND FORTHNIGHTS IN A YEAR.
(8 MARKS)
4. CHECK WHAT RESULTS YOU GET FROM USING THE ONLINE CALCULATOR USING THE
FOLLOWING SCENARIOS/SETS OF INPUTS IN TABLE 1. DO YOUR RESULTS MATCH THOSE
BELOW FOR THE LOAN SIZE AND LOAN REPAYMENT FOR SCENARIO 1 AND 6 ONLY (3 MARKS).

Attachments:

Assignment-S2….pdf