Question 3 (5 marks): Will is attempting to raise 300,000 through mortgage to purchase a house for 400,000. Assume no mortgage default insurance. The lender offers two choices: one, standard fixed rate mortgage with the prevailing reasonable interest rate j2=5% for a five year term, 25-yr amortization with monthly PMT. Second, a SAM (Shared Appreciation Mortgage) available at a hugely discounted rate j2= 4%, still a five year term, amortized over 25 years with monthly payments. But SAM requires him to sacrifice 15% of property value appreciation by the time will expects to sell the house, assume it is at the end of the term. Assume the house price is expected to rise 3% per year. Then what is the PV of price appreciation Will gives up under SAM? Question 3 (5 marks): Will is attempting to raise 300,000 through mortgage to purchase a house for 400,000. Assume no mortgage default insurance. The lender offers two choices: one, standard fixed rate mortgage with the prevailing reasonable interest rate j2=5% for a five year term, 25-yr amortization with monthly PMT. Second, a SAM (Shared Appreciation Mortgage) available at a hugely discounted rate j2= 4%, still a five year term, amortized over 25 years with monthly payments. But SAM requires him to sacrifice 15% of property value appreciation by the time will expects to sell the house, assume it is at the end of the term. Assume the house price is expected to rise 3% per year. Then what is the PV of price appreciation Will gives up under SAM