1. Thinking/Inquiry/Problem Solving, Communication [4 marks] Lyla and Steele are thinking about buying a home. They are both working in fairly stable jobs. They hope to being a family in the next few years and so expect that their living expenses will increase. Interest rates have begun to decrease, and it appears that the trend will continue over the next few years. a) Should they consider an open or closed mortgage? Explain your choice. b) Should they consider a fixed-rate or variable-rate mortgage? Explain your choice. 2. Knowledge/Understanding [6 marks] Complete the following amortization table to show the first 6 monthly payments for a mortgage of $100 000. The interest rate is 8%, compounded monthly, and the monthly payments are $785.00. Payment Monthly Number 0 Payment - Principal Interest For 1 mo Paid Outstanding Principal 100 000.00 1 2 3 4 5 6 $785.00 mgn Mathematics-Benedett 3. 71. A mortgage of $190 000 is required to purchase a house. The mortgage will be repaid with equal monthly payments over 25 years at 8% compounded monthly. a) What is the total monthly payment? b) What is the total interest paid over the 25 years? c) How does the total amount paid compare with the amount of the mortgage? d) What percent of the total amount paid is interest? e) This mortgage has an initial term of 5 years. The mortgage is renewed for another 5-year term at 6% compounded monthly. Calculate the outstanding principal when the mortgage is renewed. f) What is the new monthly payment? [20 marks] Put your solution on paper you provide. 4. Explain the difference between the amortization period and the term of a mortgage. [2 marks]