Five years ago, the Jones were looking at buying a new house in Richmond.

a) Their bank used the 32% rule: no more than 32% of their gross monthly income can go towards paying their mortgage, property taxes and heating costs. If their gross monthly income was $12,500, property taxes were $3600 per year and heating costs $125 per month, what is the maximum monthly mortgage payment they could afford?

b) The jones ended up purchasing a house for $830,000. They made a 20% discount payment and amortized the balance over 25 years. The interest rate was 3.8% compounded-semi annually for a 5 year term. Find the size of their monthly payment. Next dollar.

c) How much of the 60^th payment was interest?

d) What percentage of the original mortgage did they pay off after 5 years of payment?

e) How much did they still owe after making 5 years of payments?

f) Today, the interest rate has risen to j2 = 4.8%. To help pay the higher payment, the jones decide to increase their mortgage and use the money to build a rental suite in their basement. With this rental income they feel that they can comfortably afford a mortgage payment of $4000 per month. By increasing their mortgage how much money would they receive to pay for the renovation if they still wany to pay off their mortgage in 20 years?