Shanna wants to buy a house costing $325,000 and has obtained aloan from TD Bank. A minimum down payment of 15% would be requiredand the bank will provide the difference. Her grandparent have toldher that they will cover her down payment.

a. TD Bank has quoted her mortgage interest rate is 4.5%; thisrate would be compounded semi- annually, while her payments wouldbe made monthly. What is the effective monthly interest rate (EMR)that she would pay? (5 marks)

b. Calculate her monthly mortgage payment, assuming 15% downpayment from her grandparents and a mortgage maturity of 25 years.(5 marks)

c. Given (b) above, how much of her payment in the 2nd monthwill go toward repayment of principal and how much is interestpayment?