Question 2: AMORTIZATION DIFFICULT VERSION (27 marks) Kim and Lee wish to buy a house, and need to borrow $350,000 from the FirstChoice Bank which will charge interest at a rate of J12-5.40 % pa. Initially they intend to repay this loan with monthly payments of $2500, with the first payment occurring one month after the loan was taken out. However, they plan to increase this to $3500 a month after two years (24 payments) a) lustrate the cash flows associated with this loan as a fully labelled time line diagram. 3 marks b) Decompose this timeline diagram into two fully labelled time line diagrams, each of which is a simple annuity [2 marks] c) Determine how long it takes to repay the loan. [6 marks] d) Find the size of the partial payment. Describe and perform a sanity check on your answer. [4+1+1-6 marks] e) Construct an amortization table showing the last three payments (i.e two full payments and a partial payment), and describe and perform a sanity check on the final outstanding principal (8+2 10 marks]