Sharon and Barrys cousins just purchased a new condo in a building they want to live in. Their cousins paid $450,000 and said their monthly condo fees are $490, property taxes are $400 per month, and insurance is $185 per month. The cousins qualified for a fixed rate mortgage with an effective rate of .4% per month with a 20-year amortization period. Sharon and Barry want to know if they can afford a similar unit in the building. Use the information below to answer questions 1 - 3 below.

Annual gross income, $108,000

Personal monthly loan payment: $150

Car Loan Payments: $775

Credit card monthly payment of overdue balances: $200

TFSA balances: $95,000

Sharons RRSP balances: $60,000

No other assets they can use for a down payment

1. Use a Total Debt Service (TDS) Ratio of 42% to determine how much of a monthly payment they can afford.
   1. $2,070
   2. $1,975
   3. $2,275
   4. $1,825
   5. $2,855

2. Ignore the answer to part 1. Assume that the monthly payment they can afford is $2,000 and the interest rate is .4% per month for a 20 year mortgage. How large is the mortgage they can get?

Ignore the answer to part 2. Assume that the mortgage they can get is $300,000. If they have 20% to put down, what is the maximum amount they can pay for the house?