A %500,000 mortgage is amortized over 25 years with monthly payments at an interest rate of 4% compounded semi-annually. a) Find the size of the regular monthly payment and the size of the final smaller рayment. b) What is the total interest paid over the 25-year life of the mortgage? c) How much interest is paid in the first five years of the mortgage? d) If the mortgage was amortized over 20 years with monthly payments instead of 25 vears with m entbly pavmonts bo w much

A %500,000 mortgage is amortized over 25 years with monthly payments at an interest rate of 4% compounded semi-annually. a) Find the size of the regular monthly payment and the size of the final smaller рayment. b) What is the total interest paid over the 25-year life of the mortgage? c) How much interest is paid in the first five years of the mortgage? d) If the mortgage was amortized over 20 years with monthly payments instead of 25 vears with m entbly pavmonts bo w much

Corporate Fin Focused Approach

5th Edition

ISBN:9781285660516

Author:EHRHARDT

Publisher:EHRHARDT

Chapter4: Time Value Of Money

Section4.17: Amortized Loans

Problem 1ST

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Question

A %500,000 mortgage is amortized over 25
years with monthly payments at an interest
rate of 4% compounded semi-annually.
a) Find the size of the regular monthly
payment and the size of the final smaller
payment.
b) What is the total interest paid over the
25-year life of the mortgage?
c) How much interest is paid in the first five
years of the mortgage?
d) If the mortgage was amortized over 20
years with monthly payments instead of 25
years with monthly payments, how much
interest is paid over the life of the
mortgage?
Note: Please do not use excel and show
formulas.

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