Purchase of a new home John and Jane had planned to save $60 000 dollars over the next five years as a down payment on a house. Jane assured John that if they contributed $1000 each month to a savings account that pays an annual rate of interest of 2.5% compounded monthly that they would have enough money to put a down payment of $60 000 on their new house. Wanting their daughter to have a house, Jane's parents (The Henrys) have offered to lend John and Jane $65 000, which they have suggested (perhaps naively) John and Jane pay back by contributing to a savings account in the Henrys' name as per Jane's original savings plan. John's worried this is not fair to his in- laws. Is he correct? If so, devise a fair repayment plan that would see the Henrys repaid at a rate of 2.5% compounded monthly over the 5 years. The Does have qualified for a mortgage of $500,000 to be amortized over 25 years. Their mortgage broker has offered them the following options: I a. A 5 year fixed rate with monthly payments at an annual interest rate of prime+1% b. A 10 year fixed rate with biweekly payments at an annual interest rate of prime+2% Prime is currently at 1.5% and projected to increase by 0.25% every year for the next 10 years. Which Mortgage terms should they accept given that their goal is to pay as much principle as possible over the next 10 years