Question 2 (a and b )

2. Suppose John earn S60,000 annual salary. He needs to make S310 monthly payment on his new car. He also needs to make S190 monthly payment on his student loan. Estimated monthly property tax and homeowner's insurance is $450 John believes that it is a good time to buy his own condominium rather than renting an apartment. What is the maximum monthly mortgage payment that John can afford, if the lender's affordability ratios stipulate that his total installment payments do not exceed 36% of her monthly gross income? b.Suppose that John has $50,000 savings that can be used as a down payment and closing cost of the condominium. Estimated closing cost is $4,500. He qualifies for a 30-year mortgage with 3.6% APR compounded monthly. What is the most expensive housing that John can afford? 3. Art Winkler is trying to decide whether to lease or purchase a new car costing S31,000. If he leases, he will have to pay a $800 security deposit, $1,000 down payment, and monthly payments of $480 over the 36-month term of the closed end lease (at the end of the lease he can simply turn in the car assuming he does no exceed the mileage limit or abuse the car). On the other hand, if he buys the car then he will have to make a S3,100 down payment and will finance the balance with a 36-month loan with 2% APR: he'll also have to pay a 8% sales tax on the purchase price, and he expects the car to have a residual value of $20,500 at the end of the 3 year. Art can earn 3% interest on his savings. Use the automobile lease versus purchase analysis to find the total cost of both the lease and the purchase and then recommend the best strategy for Art