Nelson took out a 25-year home loan of $500,000. He made equal month-end repayments at the interest rate of 6% p.a. compounded monthly. a) How much should Nelson repay at the end of each month to pay off the loan on time? Round your answer to the nearest cent. b) Calculate the loan outstanding balance 15 years after Nelson took out the loan using the prospective method. Round your answer to the nearest cent. c) Calculate the total principal paid in the 16th year. Round your answer to the nearest cent.
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.
Nelson took out a 25-year home loan of $500,000. He made equal month-end repayments at the interest rate of 6% p.a. compounded monthly.
a) How much should Nelson repay at the end of each month to pay off the loan on time? Round your answer to the nearest cent.
b) Calculate the loan outstanding balance 15 years after Nelson took out the loan using the prospective method. Round your answer to the nearest cent.
c) Calculate the total principal paid in the 16th year. Round your answer to the nearest cent.
d) Calculate the total interest paid in the 16th year. Round your answer to the nearest cent.
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