Mr. HH makes a 10% down payment for a mortgaged home worth GHC 420,000. He obtains the loan and intends to finance it over a 20 year period. The current fixed rate is 18% p.a

QUESTIONS

8. Which of the following statement (s) is correct assuming that the partial prepayment is a one-off event and Mr. HH continues the same equal monthly payment thereafter. I. Subsequent monthly interest payments are reduced II. Subsequent principal payments increases. III. Both subsequent interest and principal payments are reduced. IV. There will be no change in the principal payments as only interest payments are affected. *

1 point

D. I and IV only

C. I and II only

A. I and IV only

B. III only

9. Using the information above, assume that the interest rate was an ARM which changed to 20% at the end of the 12th month. Determine the new equal monthly payment that Mr. HH will be required to make. *

1 point

A. GHC 6,412.43

D. GHC 5,778.98

B. GHC 5,904.87

C. GHC 4,999.00