Question 1

Jared purchased a house for $500,000. He made a down payment of 15.00% of the value of the house and received a mortgage for the rest of the amount at 4.02% compounded semi-annually amortized over 25 years. The interest rate was fixed for a 3 year period.

a. Calculate the monthly payment amount. Round to the nearest cent

b. Calculate the principal balance at the end of the 3 year term. Round to the nearest cent

c. Calculate the monthly payment amount if the mortgage was renewed for another 3 years at 3.32% compounded semi-annually? Round to the nearest cent

Question 2

Mark received a 25 year loan of $245,000 to purchase a house. The interest rate on the loan was 2.40% compounded semi-annually.

a. What is the size of the monthly loan payment?

Round to the nearest cent

b. What is the balance of the loan at the end of year 3?

Round to the nearest cent

c. By how much will the amortization period shorten if Mark makes an extra payment of $30,000 at the end of year 3?

years

months