Assume that your group represents the Credit Manager of a North Vancouver Credit

Union and that Mr$.$ Wayne Gretski, on his way through Vancouver for skiing vacation at

his Whistler townhouse. He has asked that you analyze the history of his previous and

current mortgage transactions.

a$)$ Exactly $10$ years ago, Mr$.$ Wayne Gretski purchased a beautiful condo at Whistler for

$$945,000$ and made a down payment of $$340,000.$ The balance was mortgaged at the

Canada Bank at $4\mathrm{.}45\%$ compounded semi$-$annually with monthly payments over $25$

years. The interest rate was fixed for a $5$ year term, and lump sum payments were

allowed at the end of each $5$ years without penalty.

i$)$ Calculate the monthly payment for the first $5$ years. ROUND UP TO THE NEXT

CENT.

ii$)$ Construct an amortization schedule for the first $60$ months. $($A schedule

showing only the first $3$ months, and months $57$ to $60$ inclusive, with $60$ month

totals is also required.$)$

iii$)$ Calculate the principal outstanding at the end of the first $5$ years.

iv$)$ What percentage of the first five years total monthly payments went to

reduction of the debt, and what percentage went to interest?

v$)$ What percentage of the debt has been paid off by the first five years of

payments?

b$)$ Exactly five years ago, Wayne made a lump$-$sum payment of $$125,000($in addition to

the regular payment$),$ and the interest rate was also changed to $5\mathrm{.}05\%$ compounded

semi$-$annually.

i$)$ Calculate the amount being refinanced.

ii$)$ Calculate the monthly payment for the second $5$ year period. ROUND UP TO

THE NEXT DOLLAR.

iii$)$ How much total interest did Wayne pay in the past two years?

c$)$ Wayne's mortgage has just come up for further renewal. He has decided to take

advantage of your relatively low rates and wishes to investigate tranferring it to your

North Vancouver Credit Union branch that charges $4\mathrm{.}85\%$ compounded monthly,

payable over $15$ years.

i$)$ Calculate the size of the principal balance being refinanced.

ii$)$ Calculate the size of the new monthly payment.

iii$)$ Wayne seems amazed that he has only repaid a small fraction of his original

loan. You will draw a large scale, fully labelled graph that visually explains to

Wayne how the loan has been amortized over the past ten $(10)$ years. You are

only expected to plot the annual balances owing.