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Question 2 A simplified constant payment mortgage (CPM) loan of 450,000 is negotiated between a bank and a borrower. The loan is to be repaid

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Question 2 A simplified constant payment mortgage (CPM) loan of 450,000 is negotiated between a bank and a borrower. The loan is to be repaid in 25 years, its APR is 5% and payments are made annually. Required: (a) What is the annual payment for the loan? (b) What is the loan balance at the beginning of year 5 and year 21 respectively? (c) What is the amortisation of the loan in year 5 and year 21 respectively? (d) Discuss briefly why annual amortisation is greater in year 21 than that in year 5 for CPM loans

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