ABC Bank approves a mortgage loan of US$80,000 for a term of 20 years, with an interest rate of 9.5%. The loan is granted on May 1, 2024. Questions: a) Determine the monthly payment. b) If, by November 1, 2026, you save US$12,000 and decide to make a prepayment while keeping the original term, what would the new monthly payment be? c) If instead of keeping the term, you choose to keep the monthly payment the same, when would the loan be paid off? d) In your group’s opinion, explain which option (b or c) is more efficient and why.

ABC Bank approves a mortgage loan of US$80,000 for a term of 20 years, with an interest rate of 9.5%. The loan is granted on May 1, 2024. Questions: a) Determine the monthly payment. b) If, by November 1, 2026, you save US$12,000 and decide to make a prepayment while keeping the original term, what would the new monthly payment be? c) If instead of keeping the term, you choose to keep the monthly payment the same, when would the loan be paid off? d) In your group’s opinion, explain which option (b or c) is more efficient and why.

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter5: The Time Value Of Money

Section: Chapter Questions

Problem 41P

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