An individual intends to take out a mortgage of 300,000 to purchase a new house. The mortgage is to be repaid by level instalments payable monthly in arrears over 25 years. On the day of purchase, the following costs will also be incurred: - a property survey fee of 500 - a mortgage set-up fee of 250 - legal fees of 1,000, and - stamp duty of 3% of the purchase price (in excess of 100,000 ) The mortgage is to be repaid by level instalments payable monthly in arrears over 25 years. Bank A will use an effective rate of interest of 4.5% per annum. Bank B will pay all of these initial costs on behalf of the individual, but will also charge a higher effective interest rate of 4.75% per annum. a. If the individual has savings to cover these initial costs, use Excel to calculate the rate of return that must be earned over the 25-year repayment period on the monthly saving (between the repayment to Bank B and that to Bank A) such that it becomes more cost-effective to pay the costs from the savings and borrow the 300,000 purchase price from Bank A. Hint: You may find the Solver function in Excel useful here, but you should also fully explain your working An individual intends to take out a mortgage of 300,000 to purchase a new house. The mortgage is to be repaid by level instalments payable monthly in arrears over 25 years. On the day of purchase, the following costs will also be incurred: - a property survey fee of 500 - a mortgage set-up fee of 250 - legal fees of 1,000, and - stamp duty of 3% of the purchase price (in excess of 100,000 ) The mortgage is to be repaid by level instalments payable monthly in arrears over 25 years. Bank A will use an effective rate of interest of 4.5% per annum. Bank B will pay all of these initial costs on behalf of the individual, but will also charge a higher effective interest rate of 4.75% per annum. a. If the individual has savings to cover these initial costs, use Excel to calculate the rate of return that must be earned over the 25-year repayment period on the monthly saving (between the repayment to Bank B and that to Bank A) such that it becomes more cost-effective to pay the costs from the savings and borrow the 300,000 purchase price from Bank A. Hint: You may find the Solver function in Excel useful here, but you should also fully explain your working