The Cooks live in an old plantation house. The upkeep on the house is approximately $1,500 per year. The heating and cooling costs approximately $2,300 per year. The Cooks would like to build a new house that costs $165,000. They are able to pay 30 percent down and obtain a loan for the remainder of the cost at 8.25 percent. They arrange to pay off the principal in equal annual payments over 25 years, and the interest is paid annually on the remaining loan. The heating and cooling will be cut by 75 percent and the upkeep by 90 percent.

a. What will they owe on the house after the fifth year payment?

b. What will they save on upkeep and heating and cooling in 5 years?

c. What will be the interest in the sixth year?

d. How does the saving in upkeep and heating and cooling compare to the interest paid in the sixth year?