Walid has taxable income of 80,000. He is single, and the bank agrees to lend him money (he qualifies for a mortgage) using up to 36% of his after-tax income for mortgage costs. The interest rate is 4.78% per year, for a 30 year mortgage.

Please see the tax table on the back of this page. What is the most expensive house that he can purchase, assuming that his parents pay the required 10% downpayment, and he pays

a) monthly mortgage payments paid at the end of each month (loan is compounded monthly)

b) semi-annual mortgage payments paid at the end of each 6 month period (loan is compounded twice per year)