1. [21 Points] Julie has $30,000 in savings and plans to use it for a down payment on a house. The house costs $285,000, so the remaining $255,000 will be financed through a mortgage (loan) with her bank. She will be making bi-weekly payments over 25 years at 3.25% to pay off the mortgage. a. [3 Points] Calculate Julie's bi-weekly mortgage payment. b. [3 Points] Of her 1st payment to the bank, how much will go to pay interest on the mortgage and how much will go towards paying down the loan? c. [3 Points] What will be the total interest paid over the 25 years? d. [3 Points] The mortgage will come up for renewal in 5 years. How much will she owe at that time? e. [3 Points] Over the 1st 5 years, how much interest has she paid and how much has she paid on the mortgage? f. [3 Points] Julie would like to pay off the mortgage in less than 25 years and has determined that she can afford to pay $700 bi-weekly (this should be larger than the amount you found in part a above). How long will it take Julie to pay off the mortgage. Find your answer algebraically, not simply with Goal Seek. 2. [10 Points] The Smith family is planning for their daughter's education. She just turned 5 years old and will be 18 when she starts university. They are planning to make monthly deposits of $300 into an RESP (Registered Educational Savings Program). Deposits are made at the end of each month. They anticipate that they can earn a return of 4.8% APR compounded monthly on their RESP. When their daughter starts university, she will withdraw $20,000 to pay for her 1st year. The balance will be paid out at the end of each year (end of 1st, end of 2nd and end of 3rd) in equal amounts to pay for the subsequent years. During those 3 years the Smith's hope that the account will earn 6% APR compounded annually. a. Draw the timeline for the Smith family planning for their daughter's education over 16 years. b. Calculate how much their daughter can expect to withdraw each year? 3. [21 Points] Graves Lighting is considering the replacement of a metal stamping machine at their facility in Dayton, Ohio. Machine A will cost $37,000, have annual maintenance costs of $2,800 (payable at the end of the year), need a major refit after 8 years costing another $7,000, and have a resale value of $11,000 at the end of its 15 year life. Machine A offers many productivity savings over the machine it replaces and is expected to generate savings of $9,000 per year (assume this accrues at the end of the year). The alternative is to buy the less expensive Machine B at a cost of $27,000. The annual maintenance will only be $2,000 per year. It will also need a refit after 8 years at $5,000 and have a resale value of $8,000 at the end of its 15-year life. It is not as efficient as Machine A and will generate savings of just $7,000 per year. If Graves uses an interest rate of 15% compounded annually to evaluate projects, which is the better choice based upon Net Present Value (NPV)