A couple bought a business to rent apartments near St Clair's College in North York. They purchased it for $800,000. They made a down payment of 30% of the value of the rental business and received the rest of the purchase price in a 25-years amortized mortgage from Royal Bank Canada. The interest rate was 5.80% compounded semi-annually and the payments were at the end of each month. The interest rate was fixed for a 3-year term. a) What is the amount of down payment? What was the amount left to be amortized over the 25 years? b) How many payments are there over the 25-year amortization? c) What would be the monthly periodic interest rate be?

A couple bought a business to rent apartments near St Clair's College in North York. They purchased it for $800,000. They made a down payment of 30% of the value of the rental business and received the rest of the purchase price in a 25-years amortized mortgage from Royal Bank Canada. The interest rate was 5.80% compounded semi-annually and the payments were at the end of each month. The interest rate was fixed for a 3-year term. a) What is the amount of down payment? What was the amount left to be amortized over the 25 years? b) How many payments are there over the 25-year amortization? c) What would be the monthly periodic interest rate be?

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

Section: Chapter Questions

Problem 1PS

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James purchased a house for $325,000. He made a down payment of 10.00% of the value of the house and received a mortgage for the rest of the amount at 4.32% compounded semi-annually amortized over 20 years. The interest rate was fixed for a 6 year period. a. Calculate the monthly payment amount. $0.00 Round to the nearest cent b. Calculate the principal balance at the end of the 6 year term. $0.00 Round to the nearest cent c. Calculate the monthly payment amount if the mortgage was renewed for another 6 years at 3.92% compounded semi-annually? $0.00 Round to the nearest cent
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Vinu
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