QUESTION 21

2. On April 1, 2014, Mark and Janet purchased a home for $240,000 with a down payment of $20,000. They obtained a very favourable 25 year mortgage with monthly payments and interest at 3.6% compounded semi-annually.How much are their monthly payments if payments are made at the end of the month?
4. For the toolbar, press ALT+F10 (PC) or ALT+FN+F10 (Mac).

QUESTION 22

1. Refer to Question 21. At the end of each month beginning in April 2014, Mark and Janet were also able to save $200, which earned interest at 2.4% compounded monthly. How much would they have saved on March 31, 2019?

QUESTION 23

1. Refer to Questions 21 and 22. On April 1, 2019, it had been five years and their mortgage was now up for renewal. Unfortunately, interest rates had risen to 7.8% compounded semi-annually. Mark and Janet decided to put all of their savings towards the principle at that time. However they could not fully pay off the mortgage. If payments are still made at the end of the month, determine their new monthly payments.

QUESTION 24

1. Discuss the relative costs and benefits or raising new capital through a bond issue and through a stock issue. What issues should the firm consider when deciding how to raise new capital?