Question
Two years ago, Elizabeth Maynes took out a ten year $400,000 mortgage loan from XYZ Bank Limited at an annual interest rate of 6% compounded
Two years ago, Elizabeth Maynes took out a ten year $400,000 mortgage loan from XYZ Bank Limited at an annual interest rate of 6% compounded semiannually. ABC Bank Limited is offering an eight year mortgage loan at 5% interest rate per year compounded semiannually. In order to settle existing mortgage loan with XYZ, Elizabeth has to pay a penalty equivalent to last 3 months of interest (months 22, 23, and 24).
- Determine the monthly payment for the original mortgage loan.
- Determine the principal outstanding today on the original mortgage loan.
- Determine the amount of interest paid to date.
- Should Elizabeth switch to ABC? Support your answer with numerical calculations.
Step by Step Solution
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Using Financial Accounting Information The Alternative to Debits and Credits
Authors: Gary A. Porter, Curtis L. Norton
7th Edition
978-0-538-4527, 0-538-45274-9, 978-1133161646
