You are a bank manager and must advise a customer on what they would have to pay in monthly payments. The bank is offering the client a 5 year fixed rate mortgage at 2.25% or a 5 year variable rate at 1.25 %. The client requires a $500,000 mortgage and would like payments amortized over 25 years. You are also able to offer the customer a mortgage amortized over 30 years.

Provide answers to the following:

1. What are the monthly payments for the variable rate mortgage amortized over 25 years?
2. What are the monthly payments for the fixed rate mortgage amortized over 25 years?
3. What are the monthly payments for the variable rate mortgage amortized over 30 years?
4. What are the monthly payments for the fixed rate mortgage amortized over 30 years?
5. What are the advantages and disadvantages of fixed rate and variable rate mortgages?