Question

You take a 12-years fixed rate loan at 5.0% annual interest rate with initial principal of $400,000. The repayment is scheduled as quarterly instalments. (a) Solve for your quarterly payment. (6 marks) (b) Three years later, you decide the change to monthly instalment for the remaining period at the same interest rate. Solve for the monthly payment. (12 marks) c) Calculate the total interest that you need to pay for the twelve years. (2 marks)

Answer 1

	Term	12 years
	Rate	5%
	Loan amount	400000
a	Quarterly payments	$11,132.30
b	Amount repaid in 3 years	-78863.58541
	Balance after 3 years	321136.4146
	Monthly payment	$3,698.62
c	Total interest= Total payments-Loan	$133,038.10

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