PLEASE DO NOT USE EXCEL TO SOLVE THIS QUESTION. THANK YOU! HANDWRITTEN IS PREFERABLE!!

QUESTION 2 (25 MARKS) a. Darcy plans to buy a house that cost RM100,000. She has RM10,000 for down payment, but the mortgage company will not lend her the required RM90,000. However, the realtor persuades the seller to take a RM90,000 mortgage at a rate of 7% provided the loan is paid off in full in 3 years. Darcy expects to inherit RM100,000 in 3 years: but right now all she has is RM10,000, and she can afford to make payments of not more than RM7,500 per year given her salary. (The loan would call for monthly payments, but assume end-of-year annual payments to simplify things. i. If the loan was amortised over 3 years, how large would each annual payment be? Illustrate with amortization table. Could she afford those payments? (12 marks) ii. If the loan was amortized over 30 years, what would the payment be? Could she afford those payments? (5 marks) iii. To satisfy the seller, the 30-year mortgage loan would be written as a balloon note, meaning that at the end of the third year, she would have to make the regular payment plus the remaining balance on the loan. What would be the loan balance at the end of year 3, and what would the balloon payment be? Illustrate with amortization table. (8 marks)