A mortgage effective 1/1/2016 is being amortized by equal monthly installments of X at a nominal annual rate of 12% compounded monthly. The first installment was due 2 was to be due 1/1/2021. mmediately after the 24th installment was made on 1/1/2018, a new level monthly ins he same rate of interest) to shorten the total amortization period to 3.5 years so that on 7/1/2019. n which of the following ranges is the ratio Y/X?
A mortgage effective 1/1/2016 is being amortized by equal monthly installments of X at a nominal annual rate of 12% compounded monthly. The first installment was due 2 was to be due 1/1/2021. mmediately after the 24th installment was made on 1/1/2018, a new level monthly ins he same rate of interest) to shorten the total amortization period to 3.5 years so that on 7/1/2019. n which of the following ranges is the ratio Y/X?
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 mortgage effective 1/1/2016 is being amortized by equal monthly installments of X over five years including interest
at a nominal annual rate of 12% compounded monthly. The first installment was due 2/1/2016 and the last installment
was to be due 1/1/2021.
Immediately after the 24th installment was made on 1/1/2018, a new level monthly installment Y is determined (using
the same rate of interest) to shorten the total amortization period to 3.5 years so that the final installment will fall due
on 7/1/2019.
In which of the following ranges is the ratio Y/X?
Possible Answers
A < 1.25
B
с
D
≥ 1.25 but < 1.50
≥ 1.50 but < 1.75
≥ 1.75 but < 2.00
E ≥ 2.00
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