The Steins buy a house and take out a $500,000 mortgage. The mortgage is amortized over...
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The Steins buy a house and take out a $500,000 mortgage. The mortgage is amortized over 25 years with and has a 5-year term. They make monthly payments at an interest rate of i(2) = 6%. i) ii) After 4 years, the interest rates drop to 2) = 5%. If a penalty of three months' interest on the outstanding balance is charged to refinance the mortgage, should they refinance the mortgage? They wish to keep the original amortization for the loan. [8 marks] Show the first two and last two lines of the amortization table of the original mortgage. [4 marks] The Steins buy a house and take out a $500,000 mortgage. The mortgage is amortized over 25 years with and has a 5-year term. They make monthly payments at an interest rate of i(2) = 6%. i) ii) After 4 years, the interest rates drop to 2) = 5%. If a penalty of three months' interest on the outstanding balance is charged to refinance the mortgage, should they refinance the mortgage? They wish to keep the original amortization for the loan. [8 marks] Show the first two and last two lines of the amortization table of the original mortgage. [4 marks]
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