A husband and wife buy a new home and take out a $100000 mortgage loan with level annual payments at the end of each year for 15 years on which the effective rate of interest is equal to 5.5%. At the end of 5 years they decide to make a maj se and want to borrow an additional $70000 to finance the new construction. They also wish to lengthen the overall length of the loan by 8 years (.e. until 23 years after the date of the original loan). In the negotiations the lender agrees to these only if the effective interest rate for the remainder of the loan after the first 5 years is raised to 6.5%. Find the revised annual payment which would result for the remainder of the loan.
A husband and wife buy a new home and take out a $100000 mortgage loan with level annual payments at the end of each year for 15 years on which the effective rate of interest is equal to 5.5%. At the end of 5 years they decide to make a maj se and want to borrow an additional $70000 to finance the new construction. They also wish to lengthen the overall length of the loan by 8 years (.e. until 23 years after the date of the original loan). In the negotiations the lender agrees to these only if the effective interest rate for the remainder of the loan after the first 5 years is raised to 6.5%. Find the revised annual payment which would result for the remainder of the loan.
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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Transcribed Image Text:A husband and wife buy a new home and take out a $100000 mortgage loan with level annual payments at the end of each year for 15 years on which the effective rate of interest is equal to 5.5%. At the end of 5 years they decide to make a major
addition to the house and want to borrow an additional $70000 to finance the new construction. They also wish to lengthen the overall length of the loan by 8 years (i.e. until 23 years after the date of the original loan). In the negotiations the lender agrees to these
modifications, but only if the effective interest rate for the remainder of the loan after the first 5 years s raised to 6.5%. Find the revised annual payment which would result for the remainder of the loan.
ANSWER = $
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