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( a ) Assume that five years ago, you renewed your TD Bank mortgage that had 1 0 years left at 6 % fixed rate
a Assume that five years ago, you renewed your TD Bank mortgage that had years left at fixed rate for five years. The interest rate is compounded semiannually, and at an effective monthly rate EMR of you have made monthly payments $ at the end of each month for the past five years.
i How much in interest and how much of the loan have you paid over the five years?
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ii You are about to renew the mortgage for the remaining years. Fortunately for you, interest rates have dropped to and you decide to refinance the mortgage.
What will be your new monthly payment for the remaining five years?
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iii Immediately after you signed the paperwork to refinance the remaining mortgage, mortgage rates dropped further from to Your bank has offered you the opportunity to renegotiate the mortgage at the lower rate of for a penalty of $
What will be your monthly mortgage amount if you decide to take the bank's offer to renegotiate at
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Should you take this opportunity offered by the bank? Assume your opportunity cost or discount rate equals the mortgage rate. Note: Estimate the savings in mortgage payments and discount them using the lower mortgage as the discount rate.
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b Suppose your mother is expecting to receive the following annual income from one of her investments with RIBC: $ in Year ; $ in Years and $ in Years and and $ in Year The cash flows occur at the end of the year. She has sought your help in analyzing the cash flows. If her required discount rate is annual compounding, what is the value of the cash flows at the end of Year
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