Kenneth is expected to receive an inheritance of about $250,000 from his grandmothers estate in a few months time. He is eyeing to buy a 1-bedder condominium so that he can stay on his own. The price of the property is $1,000,000. He is offered a 30-year mortgage loan of $750,000 at an interest rate of 1.3%.

(a)(i) Compute the monthly instalment of the mortgage loan. (8 marks)

(a)(ii) Analyse and discuss how the Mortgage Servicing Ratio (MSR) and Total Debt Service Ratio (TDSR) will impact his plan to purchase the $1m condo. Please show your workings. (14 marks)

Kenneth is also thinking of buying a car costing $120,000 (including COE) as he is already spending about $1,000 a month on taxi, Grab and Gojek. He reckons that he probably needs to just top up a bit more to pay for the monthly instalment. Moreover, he said the interest rate for car loan is very cheap. He is offered a simple flat rate of 2.3% for a loan of $84,000 for a period of 7 years.

(b)(i) Compute the monthly instalment of the car loan. (8 marks)

(b)(ii) Compute the effective annual interest rate (EAR) of the car loan. (8 marks)

(b)(iii) Discuss what other operating costs of car ownership that he should consider before buying a car. (12 marks)