A fully amortizing mortgage loan is made for $100,000 at 6 percent interest for 20 years. a.

Question:

A fully amortizing mortgage loan is made for $100,000 at 6 percent interest for 20 years.

a. Calculate the monthly payment for a CPM loan.

b. What will the total of payments be for the entire 20-year period? Of this total, how much will be interest?

c. Assume the loan is repaid at the end of 8 years. What will be the outstanding balance? How much total interest will have been collected by then?

d. The borrower now chooses to reduce the loan balance by $5,000 at the end of year 8.

e. What will be the new loan maturity assuming that loan payments are not reduced?

f. Assume the loan maturity will not be reduced. What will the new payments be?

Maturity
Maturity is the date on which the life of a transaction or financial instrument ends, after which it must either be renewed, or it will cease to exist. The term is commonly used for deposits, foreign exchange spot, and forward transactions, interest...

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