Question 1 (40 points): Mortgage Payments and Balances You purchase a home for $200,000 and borrow the entire amount from Broadway Bank at an APR of 3% with monthly payments. The maturity of your mortgage equals (30+X) years from today. You start paying off your mortgage after one month (your first payment is made exactly 1 months from today). a. (15 points) Draw a time line that depicts the cash flows from the mortgage payments i. compute the payment and show your inputs and work. ii. Use negative numbers for outflows and positive for inflows. b. (10 points) Compute the outstanding mortgage amount after you have made (10+Y) years of payments. i. Show this point on the time line, and give the inputs to your computations for full credit. ii. What is the interest and principal component of your next mortgage payment after 10+Y years? Show your computations. c. (15 points) The bank offers you another payment plan for you to consider on the mortgage for $200,000. Instead of starting your mortgage payments at t=1, you can instead start your mortgage payments six months from today (at t=6) with no payment in the interim from t=1 to t=5. If the maturity of the mortgage is unchanged at 30+X years, and the APR is 3% as well, compute the monthly mortgage payment with this payment plan. Draw a time line to illustrate the cash flows and show your computations.

X=4

Y=5

Z=3