A 30-year fully amortizing mortgage loan was made 10 years ago for $89,000 at 6 percent interest. The borrower would like to prepay the mortgage balance by $12,800. Required: a. Assuming he can reduce his monthly mortgage payments, what is the new mortgage payment? b. Assuming the loan maturity is shortened and using the original monthly payments, what is the new loan maturity?

Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
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A 30-year fully amortizing mortgage
loan was made 10 years ago for
$89,000 at 6 percent interest. The
borrower would like to prepay the
mortgage balance by $12,800.
Required: a. Assuming he can reduce
his monthly mortgage payments, what
is the new mortgage payment?
b. Assuming the loan maturity is
shortened and using the original
monthly payments, what is the new
loan maturity?
Transcribed Image Text:A 30-year fully amortizing mortgage loan was made 10 years ago for $89,000 at 6 percent interest. The borrower would like to prepay the mortgage balance by $12,800. Required: a. Assuming he can reduce his monthly mortgage payments, what is the new mortgage payment? b. Assuming the loan maturity is shortened and using the original monthly payments, what is the new loan maturity?
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