Devin received a 15 year loan of $305,000 to purchase a house. The interest rate onthe loan was 4.10% compounded semi-annually.a. What is the size of the monthly loan payment?Round to the nearest centb. What is the balance of the loan at the end of year 4?Round to the nearest cent b. What is the balance of the loan at the end of year 4?Round to the nearest centc. By how much will the amortization period shorten if Devin makes an extra paymentof $30,000 at the end of year 4?yearsmonths

Loans are paid by the monthly payments that carry the payment for interest and payment for principal…

Answered: b. What is the balance of the loan at…

b. What is the balance of the loan at the end of year Round to the nearest cent c. By how much will the amortization period shorter of $30,000 at the end of year 4? years months

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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Concept explainers

Amortized Loans

The term "amortization" refers to spreading the value of a loan or a debt over a series of regular payments or installments comprising of both the principal and interest amount. It generally involves the process where in the value of a loan or an intangible asset is written down over its maturity period.

Question

Devin received a 15 year loan of $305,000 to purchase a house. The interest rate on
the loan was 4.10% compounded semi-annually.
a. What is the size of the monthly loan payment?
Round to the nearest cent
b. What is the balance of the loan at the end of year 4?
Round to the nearest cent

b. What is the balance of the loan at the end of year 4?
Round to the nearest cent
c. By how much will the amortization period shorten if Devin makes an extra payment
of $30,000 at the end of year 4?
years
months

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