Question

answer for e and f

QuestIuI120 pm Enter the complete solution for each part in the space provided below. Highlight in BOLD your final answer for each part. Note for Part a, b, c, d, and e the solutions only require the financial calculator. For Part f you will need to use some algebra to solve the question. A $200,000 mortgage is to be amortized over 25 years with monthly payments at an interest rate of 6% compounded semi-annually. a. (3 Marks) Find the size of the regular monthly payment (round up to the nearest cent) and the size of the final smaller payment. b. (1 Mark) What is the outstanding balance after 2 years? c. (1 Mark) How much interest is paid over the life of the mortgage? d. (3 Marks) If the mortgage was amortized over 20 years with monthly payments instead of 25 years with monthly payments. How much interest is paid over the life of the mortgage? e. (6 Marks)) Based on the original mortgage (A $200,000 mortgage amortized over 25 years with monthly payments at an interest rate of 6% compounded semi-annually), suppose you made a single lump sum payment of $6000 at the end of the second year of the mortgage. ). How long would it now take to pay off the mortgage (calculate the number of years)? How much interest is paid over the life of the mortgage? f. (6 Marks) Based on the original mortgage (A $200,000 mortgage amortized over 25 years with monthly payments at an interest rate of 6% compounded semi-annually). Suppose you made a double up payment every six months (in other words every six months you make an extra payment) and at the end of each year you make a lump sum payment of $3000. How long would it now take to pay off the mortgage (calculate the number of years)? How much interest is paid over the life of the mortgage?

written show steps please

Answer 1

To solve this problem, we need to first calculate an equivalent compounding rate as per the payment is made on monthly basis. so by using formulae i=q*((1+r/m)^(m/q)-1), wherein q=12, r=6%, m=2

i will work out to 5.926%

now using the PMT function in excel, the monthly payment can be calculated as follows

rate=5.926%/12, Nper=25*12,PV=200000, PMT=1280

a) Prepare amortization schedule. size of regular monthly payment is $1280 and size of final smaller payment is $29.

b)Outstanding balance after 2 years is $192,583

c)interest paid over life of mortage is $183,900.

Amortization scedule: this will go on until month 300. due to lack of space i have given until month 24.

Months	Opeing balance (a)	Interest (b=a*5.926%/12)	Monthly Payment ©	Principal repaid (d=c-b)	Balance (a-d)
1	200000	988	1280	292	199708
2	199708	986	1280	293	199415
3	199415	985	1280	295	199120
4	199120	983	1280	296	198824
5	198824	982	1280	298	198526
6	198526	980	1280	299	198227
7	198227	979	1280	301	197927
8	197927	977	1280	302	197624
9	197624	976	1280	304	197321
10	197321	974	1280	305	197016
11	197016	973	1280	307	196709
12	196709	971	1280	308	196401
13	196401	970	1280	310	196092
14	196092	968	1280	311	195780
15	195780	967	1280	313	195468
16	195468	965	1280	314	195153
17	195153	964	1280	316	194838
18	194838	962	1280	317	194520
19	194520	961	1280	319	194201
20	194201	959	1280	320	193881
21	193881	958	1280	322	193559
22	193559	956	1280	324	193235
23	193235	954	1280	325	192910
24	192910	953	1280	327	192583