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Consider a mortgage loan of $240,000, given today, at the fixed mortgage rate of 6.076% per annum, compounded semi-annually, with an amortization period of 20
Consider a mortgage loan of $240,000, given today, at the fixed mortgage rate of 6.076% per annum, compounded semi-annually, with an amortization period of 20 years. The renewed period is 2 years and the prepayment provision is 10%. The loan requires monthly mortgage payments. Suppose after one year from today, the mortgage prepays $30,000 and the extra prepayment is subject to the 3-month interest rate penalty.
a. Calculate the extra prepayment.
b. Calculate the 3-month interest rate penalty
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