Ozmar earns a gross annual salary of $85,000, Marzo earns a gross annual salary of $90,000 and the taxable earnings on their savings combined is $2,000 per year. Their marginal tax rate is 35%. Marzo has a student loan which is paid monthly, the current balance is $25,000 with an interest rate of 1.2%, compounded monthly. This loan will be paid in full in 3 years. While Ozmar was able to purchase a car outright, Marzo purchased a new car 2 years ago at a cost of $22,000, and financed it through the dealerships plan for 60 months at 1.99% compounded monthly. Payments are monthly. Ozmar and Marzo took your earlier advice about credit card balances and now pay off their balance each month. They use their credit cards only for car expenses and restaurant meals which combined tend to be about $300 per month. Ozmar and Marzos apartment rent includes all utilities plus 2 underground parking spaces for $2,800 per month. Their car insurance combined is $300 per month and tenants insurance is $50 per month, food, entertainment and other run at about $650 per month and their joint cell phone bill is $200 per month. Marzo pays $550 per year for parking at work. Given the prices in the GTA, Ozmar and Marzo understand that they will need to move farther east and/or north to be able to afford to purchase a home. Thus they anticipate Ozmar will need to drive to work and Marzo will have a further drive so they anticipate their car expenses are likely to increase to about $600 per month, plus Ozmar would need to pay for parking at work which is $350 per year. In addition to a mortgage payment, Marzo and Ozmar would also need to pay property taxes, which they estimate at $2,500 per year, utilities (electricity, water, internet) which they estimate at $300 per month and maintenance which they estimate at $1,200 per year. Marzo and Ozmar have $150000 in savings available for use in a house purchase. They have been examining the market for a while and realize that they will need about $3,000 for closing costs, and would like to keep $15,000 as an emergency fund, which leaves them with a down payment of $132,000. They have seen a property North of Whitby which they are very interested in. It is about 20 years old but has been well maintained, although not upgraded. They believe that they could acquire this property for $700,000. They realize that they do not meet the 20% minimum down payment amount so will have to pay Mortgage Loan Insurance. Thus, they estimate the monthly payments for a 5 year fixed mortgage, with a 25 year amortization period at a rate of 3.59% will be $2,862.91. For a 5 year variable rate, closed mortgage, with a 25 year amortization period at a rate of 2.05%, they estimate their monthly payment would be $2,421.35. Marzo and Ozmar have received pre-approval for a mortgage up to $700,000 and have determined they will go with the 5 year fixed rate of 3.59%. Before they move forward to purchase the property, they would like to do a comparison of renting versus buying. The information above provides a significant number of estimates for you to use, however, also assume that Ozmar and Marzo could earn an annual return of 2% on their security deposit or downpayment if it was not being used otherwise; that their home owners insurance policy would be $1000 per year and that, combining their car insurance policies with their home owners policy would reduce the annual car insurance cost by 15%. Also assume an expected increase in property value of 5% over 3 years and that mortgage payments over 3 years would reduce the balance owed by $44,620.10. Create a table similar to that in Exhibit 7.9 (page 216 in the text) to compare the cost of renting versus buying. The information given provides actual numbers or estimates for the elements in the table. Based on this table, was the decision to purchase a wise investment? Why or why not? Marzo and Ozmar are very happy. They have just discovered that their planned family will begin somewhat earlier than originally anticipated. They expect to be parents in 7 months. They are able to purchase creditor insurance and critical illness insurance on their mortgage. They can purchase creditor insurance coverage for $65.59 per month. They can add critical illness for one party for $136.23 per month; if they wish to provide combined insurance for both Ozmar and Marzo, the cost would be $231.60 per month. Provide recommendations (with explanations as to why) regarding creditor insurance. Also provide recommendations (with explanations as to why) regarding including critical illness insurance for Ozmar or Marzo or both.