A 90,000 mortgage is repaid by payments at the end of each month ii 2

for the next 25 years. The rate of interest is 11^% convertible semiannually.

(a) Divide the first payment into principal and interest.

(b) Find the outstanding principal immediately after the 75^^

payment.

(c) Divide the 76^^ payment into principal and interest.

(d) Find the total amount of interest paid during the life of the mortgage.

(e) The borrower is temporarily unable to make payments 76 through 94 inclusive. He then wishes to increase his payments so that the mortgage will still be paid off at the scheduled time. Find the amount of the new payment.

AppendixLO1