Five years ago, Ms. Halliday received a mortgage loan from the Bank of Nova Scotia for $60,000 at 7.8% compounded semiannually for a five-year term. Monthly payments were based on a 25-year amortization. The bank is agreeable to renewing the loan for another five-year term at 6.8% compounded semiannually. Calculate the principal reduction that will occur in the second five-year term if: a) The payments are recalculated based on the new interest rate and a continuation of the original 25-year amortization. b) Ms. Halliday continues to make the same payments as she made for the first five years (resulting in a reduction of the amortization period)
Mortgages
A mortgage is a formal agreement in which a bank or other financial institution lends cash at interest in return for assuming the title to the debtor's property, on the condition that the obligation is paid in full.
Mortgage
The term "mortgage" is a type of loan that a borrower takes to maintain his house or any form of assets and he agrees to return the amount in a particular period of time to the lender usually in a series of regular equally monthly, quarterly, or half-yearly payments.
Five years ago, Ms. Halliday received a mortgage loan from the Bank of Nova Scotia for $60,000 at 7.8% compounded semiannually for a five-year term. Monthly payments were based on a 25-year amortization. The bank is agreeable to renewing the loan for another five-year term at 6.8% compounded semiannually. Calculate the principal reduction that will occur in the second five-year term if:
a) The payments are recalculated based on the new interest rate and a continuation of the original 25-year amortization.
b) Ms. Halliday continues to make the same payments as she made for the first five years (resulting in a reduction of the amortization period)
I know the answers are $7,795.33 and $10,094,51 respectively but I am not sure how to get them
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