1. Determine the required monthly payments for the mortgage.

2. Determine the opportunity costs, on a monthly basis, of using the required funds for closing (i.e., down payment plus all closing costs), rather than leaving those funds invested and earning the monthly effective rate determined in question (1).

3. Determine the monthly additional payments required to buy versus rent (include the monthly

opportunity costs determined in question (2).

4. Determine the principal outstanding on the mortgage after:

a. Two years

b. Five years

c. Ten years

5. Determine the net future gain or loss after two, five and 10 years under the following scenarios, which Rebecca Young has determined are possible after some due diligence regarding future real estate prices in the Toronto condo market:

a. The condo price remains unchanged.

b. The condo price drops 10 per cent over the next two years, then increases back to its purchase price by the end of five years, then increases by a total of 10 per cent from the original purchase price by the end of 10 years.

c. The condo price increases annually by the annual rate of inflation of 2 per cent per year over the next 10 years.

d. The condo price increases annually by an annual rate of 5 per cent per year over the next 10

years.

6. As Rebecca Young, what decision would you make?