a. Prepare the amortization schedule for a thirty-year variable interest loan with monthly payments of $250,000 at an APR of 6.8%. specifies monthly compounding.

b.What is the interest payment and principal amounts in the 110th payment? c. Use the annuity formula to find how much principal you still owe to the bank for the 110th payment. Check that this value is the same you have in your amortization schedule.

d. How much in total interest will you pay?

e. Suppose that in the beginning of the first month of the fourth year the interest rate increased to 7.8%. Modify the amortization schedule in order to consider this change in the interest rate (you should change the values in your schedule that occur after the first month of the fourth year, not the ones before this date). 7.8% in the last line.

f. Suppose that in beginning of the first month of the fourth year (month 37) you can refinance your mortgage at the rate of 6.8%. Assume that there is no change in the time scheduled to pay the mortgage. If the cost of refinancing is $2,750, should your refinance your mortgage at the new rate of %, or keep the rate of 7.8%?

g. Suppose that at the end of the seventh year you earned an unexpected amount of money (for example from your end of year bonus at work) and decided to pay a non-scheduled payment of $8,000 of the principal of the loan. You will keep paying the same monthly total payment that you were paying in the previous months. How can you change your amortization schedule, considering that you will keep paying the same total monthly amount? Prepare a new amortization schedule that accounts for these changes.