A young couple found an apartment that they want to buy. The asking price of the apartment is $800,000. The bank has offered them a 30-year table loan repayable in 360 equal monthly instalments (at the end of each month) at a nominal interest rate of 4.8% per annum, compounded monthly.

(a) The couple can afford to pay $3,500 per month as mortgage payments. Under the terms of the loan offered by the bank, find the amount of money that the couple can borrow?

(b) The couple saved $160,000 for the deposit towards a purchase of a property. If the bank requires at least 20% of the value of the property as a deposit, can they afford to purchase this apartment for the asking price?