You are looking at a home that will cost $250,000 and are trying to decide between two different fixed-rate mortgages. The closing costs are the same on each loan and the lender does not charge points for either loan. One mortgage would be a fifteen (15) year mortgage and have a stated annual interest rate of 4.50%. This mortgage would require you to put down 20% of the cost of the home. The other mortgage would be a thirty (30) year mortgage, and the stated annual interest rate would be 5.25%, and would require you to put down only 10% of the cost of the home.

a. What is the monthly mortgage payment on each mortgage?

b. How much of the 30-year mortgage would be left to pay when the 15-year mortgage would mature?

c. What is the incremental annualized interest-rate cost of the 30-year mortgage?