2. Assume that you are buying a house for $500, 000 and you have to finance 80% of it from the bank at 6% p.a. for 20 years. It is to be repaid monthly.

a) What is the monthly repayment amount? Assume the interest is compounded monthly.

b) At the end of year 5 you have to sell your house and move to the U.S.

i. How much money do you still owe the bank?

ii. How much principal and interest have you paid in the last 5 years?

iii. If the house price increases on average 10% per year, how much would you be able to take to the U.S. after selling the house and payoff the loan?