QUESTION ONE A fully amortizing mortgage loan is made for sh.100,000 at 6 percent interest for 20 years. Required; Calculate the monthly payment for a CPM loan. What will the total of payments be for the entire 20-year period? Of this total, how much will be interest? Assume the loan is repaid at the end of 8 years. What will be the outstanding balance? How much total interest will have been collected by then?
QUESTION ONE A fully amortizing mortgage loan is made for sh.100,000 at 6 percent interest for 20 years. Required; Calculate the monthly payment for a CPM loan. What will the total of payments be for the entire 20-year period? Of this total, how much will be interest? Assume the loan is repaid at the end of 8 years. What will be the outstanding balance? How much total interest will have been collected by then?
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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QUESTION ONE
A fully amortizing mortgage loan is made for sh.100,000 at 6 percent interest for 20 years.
Required;
Calculate the monthly payment for a CPM loan.
What will the total of payments be for the entire 20-year period? Of this total, how much will be interest?
Assume the loan is repaid at the end of 8 years. What will be the outstanding balance? How much total interest will have been collected by then?
The borrower now chooses to reduce the loan balance by sh.5,000 at the end of year 8.
What will be the new loan maturity assuming that loan payments are not reduced?
Assume the loan maturity will not be reduced. What will the new payments be?
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