Fifty percent of the purchase price is debt. The debt has an interest rate of 4% per annum and you must repay $25,000 in principal at the end of each year.

Questions

1. How much mortgage is recorded at the time of purchase?
   1. 400,000
   2. 500,000
   3. 550,000
   4. 600,000
2. What is your mortgage balance at the time of sale?
   1. 375,000
   2. 475,000
   3. 500,000
   4. 625,000