Suppose a couple in their early 30s is planning to buy a new HDB flat. The selling price of the HDB flat is $350,000. The couple has sufficient cash to make a down-payment of $35,000 (from CPF and other savings), and wishes to get a loan from HDB for the balance. The loan from HDB is a 25-year fixed-rate loan at 2.6% APR. Assume monthly compounding and that monthly payments begin in one month. While waiting to try their luck in the BTO queueing process, the couple also wishes to consider the possibility of buying from the resale market directly. Assume they can afford $2000 monthly payments and also go for a 25-year HDB loan at 2.6% APR.

Demonstrate your understanding of Time Value of Money, by calculating the monthly mortgage payment if they buy BTO flat directly from HDB; and figuring out what is the maximum price of a resale HDB flat they can afford, given their financial circumstances.