Matlab Question

A'=rA-12p

Now we turn to the adjustable rate mortgages. Suppose that for the same $750,000 mortgage a bank offers an adjustable rate mortgage, which starts with an initial lower fixed rate of 3% (r = 0.03) for the first 5 years and is tied to credit markets after that. Let's assume that after the first 5 years the rate increases as r(t) = 0.03 + 0.015vt 5, so er r(t) = 10.03 10.03 +0.015Vt 5 t>5 VI A er Use Euler's method with h = 0.01 to answer the following. 1. Suppose your friends pay $4000 per month. How long will it take them to pay off the mortgage? 2. What about if they pay $4500 per month? 3. How much interest is paid in each case? 4. Plot the numerical solution A(t) for both scenarios on the same graph. How does the variable interest rate affect the graph, compared to the fixed rate? How do the different payment sizes affect the graph