Exercise 3: (20 points)

You are a personal finance advisor at the BQ bank, and you receive in your office a young couple who want to acquire an apartment, whose value is estimated at $400,000. You require them a minimum down payment of 5%, which they should pay in cash, and for the rest of the loan you offer them a financing plan at the nominal rate of 6% capitalized quarterly, over a period of 20

Years.

According to your estimates:

1. How much will this couple have to pay each month to repay the mortgage?

2. What is the amount of interest paid for the duration of the mortgage?

3. What is the balance of the mortgage at the end of the 5th year?

4. If at the beginning of the 6th year the nominal rate increases to 8% capitalized quarterly, what is the new amount of the monthly payment?