a. The Woods have $50,000 to use as a down-payment on a house, and they want to borrow $250,000 to buy a house for $300,000. The current annual mortgage interest rate is 3%. What will their monthly payment be for a 30-year loan that has equal monthly payments? Note, they will owe zero at the end of the mortgage.

b. Mrs. Woods sees an advertisement for a 15-year loan at a rate of 2.5%. What would be the mortgage payment if they borrow $250,000 at this lower interest rate?

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