You have been very successful in business and it is time to buy the big boat so you can sail the blue seas of the Bedford basin and entertain your friends. You do your research and find the boat you want in Portugal. The price of the boat is $300,000 and it will cost $20,000 to have the boat delivered to Halifax. You go to the bank to borrow the entire amount of the purchase and the bank offers you a loan with a 20-year amortization at 5% with a 5-year term. You plan on making a monthly payments on this loan.

*Not done in excel

1. Calculate your monthly payments. Show your work!

b. At the end of the 5^th year, you will need to negotiate a new interest rate and a new payment schedule. The loan contract allows you to pay down 10 percent of the original loan amount with no penalty. You have saved the 10 percent so you will pay down the amount you owe to the bank. How much do you still owe the bank before you pay down the loan amount? Show your work!

c. When you go to the bank to renegotiate your loan with the bank. Interest rates are now 4.75 percent. If you make the payment to reduce the loan balance for the remaining amortization period, what are your new loan payments? Show your work!

d. If this loan had been to the purchase of a summer home, explain what changes would be made for your calculations in the previous parts of this question? No calculations required.