3.A young engineer is in the process of purchasing a home.The home costs $350,000. The engineer will make a twenty percent down payment on the house. The loan will be a variable rate mortgage over a fifteen-year period. The nominal interest rate for the first seven years of the loan is 4% per year, then the nominal interest rate will increase to 6% per year for the remaining life of the loan. The interest and payments will be monthly.

a.Compute the monthly payment for the first seven years of the loan

.b.Compute the amount of the balloon payment due after seven years of payments.

c.Compute the monthly payment for the remaining life of the loan.

d.Develop an equation to solve for the effective interest rate per month charged by the loan over the fifteen-year period.

e.Compute the effective interest rate per month to four decimal places, the nominal rate per year and the effective interest rate per year to two decimal places.