Elena just bought a condo in downtown Vancouver, and the purchase price is $750,000.

For this condo purchase, she used her savings to pay for the down payment of 30% of the purchase amount and received a mortgage for the remaining amount from her bank. The bank provided the mortgage rate at 1.60% APR semi-annual compounding at 5 years fixed rate term. The mortgage required Elena to make equal monthly payment and she chose 25-year amortization.

Using financial calculator or appropriate financial formula, please calculate the followings. Describe your calculation steps where applicable.

1. What is the monthly mortgage payment amount Elena needs to pay? And how much Elena will owe to the bank if she sells her condo after 5 years?

2. If Elena were to determine if she makes a profit/loss in selling her condo after 5 years, what relevant cash flows would she need to consider in her quantitative analysis?

3. If Elena does not sell her condo in 5 years and she can borrow the outstanding mortgage amount with the same mortgage rate for the next 10 years, what would be the total interest Elena would have paid over 15 years?

Answer rating: 100% (QA)

1 Monthly Mortgage Payment Amount To calculate the monthly mortgage payment amount well use the formula for a fixedrate mortgage M P r 1 rn 1 rn 1 Where M Monthly mortgage payment P Principal amount p... View the full answer