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?

EBK CFIN

6th Edition

ISBN:9781337671743

Author:BESLEY

Publisher:BESLEY

Chapter4: Time Value Of Money

Section: Chapter Questions

Problem 25PROB

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