A supermarket building was constructed 6 years ago financed by a ten- year bank loan of Php1,000,000 with 9% annual interest rate, compounded monthly. The company operating the supermarket has paid all the monthly installments for the past 6 years. However, to reduce the amount of the installment payments, it was decided to refinance the balance of the loan through an insurance company. The new loan is for 10 years with interest at 10%, compounded quarterly, and with a service charge of 6% to be added to the loan. Determine (a) the balance due on the original mortgage, and (b) the amount of the quarterly payments to the insurance company.
A supermarket building was constructed 6 years ago financed by a ten- year bank loan of Php1,000,000 with 9% annual interest rate, compounded monthly. The company operating the supermarket has paid all the monthly installments for the past 6 years. However, to reduce the amount of the installment payments, it was decided to refinance the balance of the loan through an insurance company. The new loan is for 10 years with interest at 10%, compounded quarterly, and with a service charge of 6% to be added to the loan. Determine (a) the balance due on the original mortgage, and (b) the amount of the quarterly payments to the insurance company.
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Transcribed Image Text:A supermarket building was constructed 6 years ago financed by a ten-
year bank loan of Php1,000,000 with 9% annual interest rate,
compounded monthly. The company operating the supermarket has paid
all the monthly installments for the past 6 years. However, to reduce the
amount of the installment payments, it was decided to refinance the
balance of the loan through an insurance company. The new loan is for 10
years with interest at 10%, compounded quarterly, and with a service
charge of 6% to be added to the loan. Determine (a) the balance due on
the original mortgage, and (b) the amount of the quarterly payments to
the insurance company.
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