Suppose you are planning to buy a residential property for $650,000 and wanted to take a 20- year loan for 80% of the property value. The interest rate is 4.25% per annum, and payments are required to be made annually at the end of each year. a) Calculate the annual mortgage payment on the loan (1 marks) b) Construct a mortgage amortisation table showing loan balance at the beginning of each period, annual repayment amount, interest payment, the amortisation of the loan and the loan balance for each year. (10 marks)

c) Draw a graph showing the interest portion and repayment of the principal amount and comment on the change in the proportion of interest paid and the principal amount over the period (2 marks)