please answer the following 3 parts as soon as possible

MATH 114 Assignment 4 (continued) PARTI You operate a local mortgage & loan business with two other partners. Your role is to understand the Bank of Canada's target overnight rate and how it affects your bottom line. 1. Suppose your business would like to borrow funds from the Bank of Canada. You can do this; however, the Bank of Canada will charge you the target overnight rate as a borrowing fee. (a) Explain briefly what the target overnight rate is. (b) What is the current target overnight rate and when was it last changed? What was the main reason for the change to the target overnight rate? (C) Suppose the target overnight rate increases to 1.5% How might this affect the rates you give to your customers? How might this change the demand for loans & mortgages for your business? 2. You borrow $10,000 from the Bank of Canada at the current target overnight rate for two years (assume compounded monthly). You lend $5,000 at a rate of 3.5% compounded monthly for two years; and lend the other $5,000 at a rate of 2.5% compounded monthly Assuming the loans are paid off in a lump sum in two years, determine your net profit two years from today. Include a time dingram for full marks and perform all calculations by hand MATH 114 Assignment 4 (continued) PART II You operate a local mortgage & loan business with two other partners. Your role is to understand Canada's prime interest rate and how to apply it to loans. 1. Suppose your business would like to issue an annuity in the form of a loan with quarterly payments to a customer. You can do this; however, you must first understand the prime interst rate. () Explain briefly what the term prime rate means and what the current prime rate in Canada is. (b) In response to inflation, Canada increased the prime interest rate in the early 1980s to the highest it has ever been. What was the maximal prime interest rate and the month/year this happened? (e) To give you an idea of how much 1% makes a huge difference to a mortgnge, do termine the future value of $100,000 in 25 years in two ways: (1) at a rate of 2% compounded monthly (2) at a rate of 3% compounded monthly. You do not need to include a time diagram. Perform all calculations by hand. 2. After three years of making quarterly payments of $580 at the end of each quarter, your client paid off her loan. If you gave the client the prime interest rate compounded monthly, what was the principle loan amount? You may answer either by hand, or using the calculators TVM buttons. If you use the calculator, ensure you write down all of your inputs for full marks. No time diagram is necessary Assignment 4 (continued) MATH 114 PART III You operate a local mortgage & loan business with two other partners. Your role is to adjust the prime interest rate for variable & fixed mortgages for your customers, as well as deal with the length of a mortgage 1. A client comes in looking to apply for a mortgage, but does not have any prior knowledge. Answer the following questions to help them decide which type of mortgage to get (a) At most banking institutions, there are two types of mortgages available: fired mortgages and variable mortgages. Describe the difference between the two main types of mortgages. Give one positive and one negative aspect of each type of mortgage (b) Banks will often advertise interest rates using the terminology prime plus/minus percent. For example, if prime is 1.5%, then 2,5% might be advertised as prime plus 18. Express 1.45% and 4,35% using the terminology of prime plus/minus percent using Canada's current prime interest rate. 2. How many years will it take for your client to pay off a mortgage of $250,000 if he makes month-end payments of $1,5007 Assume a fixed interest rate of prime minus 0.5% over the term of the whole mortgage. You may answer either by hand, or using the calculators TVM buttons. If you use the calculator, ensure you write down all of your inputs for full marks. No time diagram is necessary 3. Your client borrows $250,000 and agrees to pay $1,500 at the end of every month for a 5-year term. At the end of five years, there is $200,000 remaining on the mortgage. Use the calculator's TVM button to determine the fixed interest rate on this mortgage (you will be unable to do this any other way). Write down all of your inputs, paying careful attention to negative signs, for full marks. Express your final answer using prime plus/minus terminology. No time dingram is necessary MATH 114 Assignment 4 (continued) PARTI You operate a local mortgage & loan business with two other partners. Your role is to understand the Bank of Canada's target overnight rate and how it affects your bottom line. 1. Suppose your business would like to borrow funds from the Bank of Canada. You can do this; however, the Bank of Canada will charge you the target overnight rate as a borrowing fee. (a) Explain briefly what the target overnight rate is. (b) What is the current target overnight rate and when was it last changed? What was the main reason for the change to the target overnight rate? (C) Suppose the target overnight rate increases to 1.5% How might this affect the rates you give to your customers? How might this change the demand for loans & mortgages for your business? 2. You borrow $10,000 from the Bank of Canada at the current target overnight rate for two years (assume compounded monthly). You lend $5,000 at a rate of 3.5% compounded monthly for two years; and lend the other $5,000 at a rate of 2.5% compounded monthly Assuming the loans are paid off in a lump sum in two years, determine your net profit two years from today. Include a time dingram for full marks and perform all calculations by hand MATH 114 Assignment 4 (continued) PART II You operate a local mortgage & loan business with two other partners. Your role is to understand Canada's prime interest rate and how to apply it to loans. 1. Suppose your business would like to issue an annuity in the form of a loan with quarterly payments to a customer. You can do this; however, you must first understand the prime interst rate. () Explain briefly what the term prime rate means and what the current prime rate in Canada is. (b) In response to inflation, Canada increased the prime interest rate in the early 1980s to the highest it has ever been. What was the maximal prime interest rate and the month/year this happened? (e) To give you an idea of how much 1% makes a huge difference to a mortgnge, do termine the future value of $100,000 in 25 years in two ways: (1) at a rate of 2% compounded monthly (2) at a rate of 3% compounded monthly. You do not need to include a time diagram. Perform all calculations by hand. 2. After three years of making quarterly payments of $580 at the end of each quarter, your client paid off her loan. If you gave the client the prime interest rate compounded monthly, what was the principle loan amount? You may answer either by hand, or using the calculators TVM buttons. If you use the calculator, ensure you write down all of your inputs for full marks. No time diagram is necessary Assignment 4 (continued) MATH 114 PART III You operate a local mortgage & loan business with two other partners. Your role is to adjust the prime interest rate for variable & fixed mortgages for your customers, as well as deal with the length of a mortgage 1. A client comes in looking to apply for a mortgage, but does not have any prior knowledge. Answer the following questions to help them decide which type of mortgage to get (a) At most banking institutions, there are two types of mortgages available: fired mortgages and variable mortgages. Describe the difference between the two main types of mortgages. Give one positive and one negative aspect of each type of mortgage (b) Banks will often advertise interest rates using the terminology prime plus/minus percent. For example, if prime is 1.5%, then 2,5% might be advertised as prime plus 18. Express 1.45% and 4,35% using the terminology of prime plus/minus percent using Canada's current prime interest rate. 2. How many years will it take for your client to pay off a mortgage of $250,000 if he makes month-end payments of $1,5007 Assume a fixed interest rate of prime minus 0.5% over the term of the whole mortgage. You may answer either by hand, or using the calculators TVM buttons. If you use the calculator, ensure you write down all of your inputs for full marks. No time diagram is necessary 3. Your client borrows $250,000 and agrees to pay $1,500 at the end of every month for a 5-year term. At the end of five years, there is $200,000 remaining on the mortgage. Use the calculator's TVM button to determine the fixed interest rate on this mortgage (you will be unable to do this any other way). Write down all of your inputs, paying careful attention to negative signs, for full marks. Express your final answer using prime plus/minus terminology. No time dingram is necessary