Question
The interest rate for the first 5-year term of a $2,000,000 mortgage loan is 7.5% compounded semi-annually. The mortgage requires bi-weekly payments over a 25-year
The interest rate for the first 5-year term of a $2,000,000 mortgage loan is 7.5% compounded semi-annually. The mortgage requires bi-weekly payments over a 25-year amortization period. The mortgage contract gives the borrower the right to prepay up to 10% of the original mortgage loan.... once a year, without interest penalty. Suppose that, at the end of the second year of the mortgage, the borrower makes a prepayment of $250,000,
The equivalent bi-weekly interest should be ……………% ; The final payment of the loan is …………… Without prepayment; it will take ……… years to payoff the load with prepayment.
Step by Step Solution
3.44 Rating (154 Votes )
There are 3 Steps involved in it
Step: 1
To calculate the equivalent biweekly interest rate we first need to determine the number of compounding periods in a year Since the interest is compou...Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get StartedRecommended Textbook for
Income Tax Fundamentals 2013
Authors: Gerald E. Whittenburg, Martha Altus Buller, Steven L Gill
31st Edition
1111972516, 978-1285586618, 1285586611, 978-1285613109, 978-1111972516
Students also viewed these Finance questions
Question
Answered: 1 week ago
Question
Answered: 1 week ago
Question
Answered: 1 week ago
Question
Answered: 1 week ago
Question
Answered: 1 week ago
Question
Answered: 1 week ago
Question
Answered: 1 week ago
Question
Answered: 1 week ago
Question
Answered: 1 week ago
Question
Answered: 1 week ago
Question
Answered: 1 week ago
Question
Answered: 1 week ago
Question
Answered: 1 week ago
Question
Answered: 1 week ago
Question
Answered: 1 week ago
Question
Answered: 1 week ago
Question
Answered: 1 week ago
Question
Answered: 1 week ago
Question
Answered: 1 week ago
Question
Answered: 1 week ago
Question
Answered: 1 week ago
View Answer in SolutionInn App