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gewusel gewusel
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7 years ago
A demand (variable rate) mortgage of $137 000.00 is amortized over 20 years by equal monthly payments. After 21 months the original interest rate of 6% p.a was raised to 6.6% p.a. Three years after the mortgage was taken out, it was renewed at the request for the mortgagor for a five-year term at a fixed rate of 7.25% p.a.
a) Calculate the mortgage balance after 21 months.
b) Compute the size of the new monthly payment at the 6.6% rate of interest.
c) Determine the mortgage balance at the end of the five-year term.
Textbook 
Contemporary Business Mathematics with Canadian Applications

Contemporary Business Mathematics with Canadian Applications


Edition: 11th
Authors:
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#1
7 years ago
a)    p =   - 1 = 0.00486755    
   137000 = PMT 
   137000 = PMT(141.3843090)    
   $968.99 = PMT    
   PVn = 968.99 
   = 968.99(134.5076431) = $130 336.56

b)    p =   - 1 = 0.005340319    
   130335.56 = PMT 
   130335.56 = PMT(128.9285035)    
   $1010.91 = PMT

c)    PVn = 1010.91 
   1010.91(124.0775295) = $125,431.22    
   p =   - 1 = 0.005849741
   125431.22 = PMT 
   125431.22 = PMT(118.9350584)    
   $1054.62 = PMT    
   PVn = 1054.62  = 1054.62(97.14104632) = $102 446.89
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