Two (2) recent graduates have applied to a financial institution for a mortgage loan of $250 000 to assist with the purchase of a shop in a small plaza. The mortgage loan will be repaid by five (5) equal annual instalments and the institution has agreed to lend at a rate of 10% compounded annually.

Required:

Calculate the annual payment

A. Prepare an amortization schedule for the life of the loan.

B. What is the instalment payments if the term is monthly instead of annually?

C. Prepare a schedule of payments, showing principal, interest and monthly payment for three (3) months.