The interest rate for the first four years of an $92,000 mortgage loan is 8.6% compounded semiannually. Monthly payments are calculated using a 25-year amortization. a. What will be the principal balance at the end of the four-year term? (Do not round intermediate calculations and round your final answer to 2 decimal places.) Principal balance %$4 b. What will be the monthly payments if the loan is renewed at 6.0% compounded semiannually (and the original amortization period is continued)? (Do not round intermediate calculations and round your final answer to 2 decimal places.) Payment per month
The interest rate for the first four years of an $92,000 mortgage loan is 8.6% compounded semiannually. Monthly payments are calculated using a 25-year amortization. a. What will be the principal balance at the end of the four-year term? (Do not round intermediate calculations and round your final answer to 2 decimal places.) Principal balance %$4 b. What will be the monthly payments if the loan is renewed at 6.0% compounded semiannually (and the original amortization period is continued)? (Do not round intermediate calculations and round your final answer to 2 decimal places.) Payment per month
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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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.
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The interest rate for the first four years of an $92,000 mortgage loan is 8.6% compounded semiannually. Monthly payments are
calculated using a 25-year amortization.
a. What will be the principal balance at the end of the four-year term? (Do not round intermediate calculations and round your final
answer to 2 decimal places.)
Principal balance
$1
b. What will be the monthly payments if the loan is renewed at 6.0% compounded semiannually (and the original amortization period is
continued)? (Do not round intermediate calculations and round your final answer to 2 decimal places.)
Payment
%24
per month
Transcribed Image Text:The interest rate for the first five years of a $38,000 mortgage loan was 4.35% compounded semiannually. The monthly payments
computed for a 10-year amortization were rounded to the next higher $10. (Do not round intermediate calculations and round your
final answers to 2 decimal places.)
a. Calculate the principal balance at the end of the first term.
Principal balance
b. Upon renewal at 6.85% compounded semiannually, monthly payments were calculated for a five-year amortization and again
rounded up to the next $10. What will be the amount of the last payment?
Final payment
$4
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