A homebuyer takes-out a partially amortizing loan in the amount of $1,000,000 for a term of 20 years at 6% APR, compounded monthly. A balance of $200,000 will remain and be paid as a lump sum when the term expires. Assume that there are no pre-payment penalties.

(a) What are the monthly mortgage payments the homebuyer must make to the lender?

(b) What is the outstanding balance of the loan at the end of 5 years?

(c) At the end of year 5, the market rate of interest is 12%. What is the market value of the loan at the end of 5 years?

(d) If the loan is sold at market value at the end of year 5, is this loan sold at a discount?