(a) A local banker has estimated the value of a property in Hong Kong to be $1,800,000 using market value approach, $1,750,000 using cost approach and $1,790,000 using the income approach. If the banker puts weights of 30 per cent, 30 per cent and 40 per cent on the three values respectively, how much loan should the manager advance if the LVR is 70 per cent? (b) Determine the minimum monthly salary income requirement under stress test for the following mortgage loans application case, who wants to borrow up to the possible maximum loan-to-value ratio: - Applicant: A Hong Kong citizen Property value: $6.8 million Purpose: to acquire the first residential property for renting out Rental income from the property: $18,000 per month, without rental income proof Applicable interest rate for this instalment loans: 2.3%p.a. Intended repayment schedule: by monthly installments for 25 years. Monthly instalment payment can be solved by using financial calculator, or the following formula: ri1+1)* A= P. (1+r) - 1 where A is the monthly instalment payment. The relevant latest supervisory measures on property mortgage issued by the regulator of banking industry are listed below: - The discount rate regarding the net rental income of investment properties is at least 30% for cases with rental income proof or at least 40% for cases without rental income proof. - The maximum loan-to-value ratio for non-self-use residential properties with value below HK$7 million is set at 50%. For non-self-use properties, the stressed-DSR cap should be lowered to 50%, where the stress test assumes an interest rate hike of 300 bps