1. Duke was approved for a 30 year conventional loan for $250,000 at 3.65% fixed rate. He was also approved for a 15 year conventional loan for $250,000 at 3.45% fixed rate. He has $20,000 to put as a down payment. He has to pay insurance of $1400 a year and property tax of $2500 a year. Use time value of money to figure out the best options for Duke. (Be sure to show your work if you are able)

a. To avoid PMI (at least 20% down) what amount would Duke have to put down if he wants to take out the full amount of the loan ($250,000)?

b. How much more principal will he have to pay per month in order to pay off his house in 7 years if he does the following: $150,000 value home, 25% down payment, 15 year loan.