Question 2 Jack and Jill recently got married and are interested in buying a house that is priced at $1.5 million. They are considering the following mortgage offered by Bank Fantacy: The down payment is 30% of total price and the down payment is to be paid in cash. The mortgage term is 30 years with mortgage payments to be made at the end of each month. Repayment pattern of the loan is such that, the monthly repayments are adjusted upwards by 2% every year. Therefore, monthly mortgage payments in year t = Z(1.02-1), where Z is the monthly mortgage payments during the first year. Effective annual interest rate for the loan is 12.68% with monthly compounding. Calculate the monthly payments, i.e., Z, during the first year of the mortgage. (Hint: The sum of a geometric progression, a + ar + ar? + ... + ar(n-1), is equal to 9(1=r).) (1-r) (10 marks)