Question: A $130,000 mortgage loan at 7.2% compounded monthly has a 25-year amortization. a. What prepayment at the end of the first year will reduce the

A $130,000 mortgage loan at 7.2% compounded monthly has a 25-year amortization.
a. What prepayment at the end of the first year will reduce the time required to pay off the loan by one year? (Assume the final payment equals the others.)
b. Instead of the prepayment in Part (a), what prepayment at the end of the tenth year will reduce the time required to pay off the loan by one year?

Step by Step Solution

★★★★★

3.51 Rating (164 Votes )

There are 3 Steps involved in it

1 Expert Approved Answer

Step: 1 Unlock

Given PV 130000 n 1225 300 i 72 12 06 Solve for PM... View full answer

Question Has Been Solved by an Expert!

Get step-by-step solutions from verified subject matter experts

Step: 2 Unlock

Step: 3 Unlock

Document Format (1 attachment)

711-B-A-C-I (1671).docx

120 KBs Word File

Students Have Also Explored These Related Accounting Questions!

Funfair Limited a retailer specialised in selling kid toys. The company was established in 2002 in Bristol and has now been among the top three largest toy retailers in the South-West of England. It...

A $100,000 mortgage loan at 7.2% compounded semiannually requires monthly payments based on a 25-year amortization. Assuming that the interest rate does not change for the entire 25 years, complete...

A $100,000 mortgage loan at 7.6% compounded semiannually has a 25-year amortization period. a. Calculate the monthly payment. b. If the interest rate were 1% lower (that is, 6.6% compounded...

The Phams are almost two years into the first 5-year term of a 25-year $80,000 mortgage loan at 7.5% compounded semiannually. Interest rates on three-year term mortgage loans are now 6% compounded...

An Analysis of the Interest Savings from Choosing a Shorter Amortization Period Many financial planners and commentators make a great ballyhoo about the large amount of interest that can be saved by...

Question 1: A Lotto Money One of the largest lottery jackpots ever won was on March 27, 2019. The winning numbers for the $768,400,000 jackpot in Americas biggest lottery game, Powerball, were on a...

Directions for Problem #4 in Excel The goal of this problem is to have you: Use Excel to generate the future value of each of the various investments made over the course of the 25 years. Use Excel...

Can someone help me with this? I need it by tomorrow chapter 2 Issues in Accounting for Corporate Debt and Equity istockphoto Learning Objectives Be able to articulate the advantages and...

Listen to the following videos and then complete the assignments using the changed numbers on the guidance report. Place your answers on the guidance report. Open the Guidance Report and rework the...

16. The interest rate for the 25-year term of a $1,500,000 mortgage loan is 5.2% compounded semiannually, Under 30% of the total loan value as down payment, the mortgage will require bi-weekly...

Give an example of how cardinality relates to business policy.

dy The following is information from the petty cash fund from Algoma Company. According to Algoma's ledger, the fund should have a balance of $300. Required: reconciled account and determined the...

what is the fundamental reason for performing life cycle costing? A ) To reduce the cost of life cycle costing B ) To ensure life cycle costing meets compliance C ) To optimize life cycle costing...

Which of the following are concepts or terms relevant to the discipline of disaster recovery? [Choose all that apply.] A. Backup policies B. Backup execution C. Warm site Backup frequency D. Cold...

How the basic government structure impacts a country's criminal justice and correctional system?

Conduct a role play of the meeting with 2 members from your class. Each member will select one of the following roles making sure that all 3 roles are selected: Marketing Manager. Responsible for...

In January, Rollins Company is paid $500 by a client for work that Rollins will not begin until February. Which of the following is the correct journal entry for Rollins to make when the $500 is...

Accounting for Patents On June 30, 2010, your client, Ferry Company, was granted two patents covering plastic cartons that it had been producing and marketing profitably for the past 3 years. One...

Accounting for Research and Development Costs Cuevas Co. is in the process of developing a revolutionary new product. A new division of the company was formed to develop, manufacture, and market this...

Accounting for Research and Development Costs Czeslaw Corporations research and development department has an idea for a project it believes will culminate in a new product that would be very...

A non-dividend-paying stock has a futures contract with a price of $94.90 and a maturity of two months. If the risk-free rate is 4.5 percent, what is the price of the stock? (Do not round...

Question 6 ' f4 ' A normal population has a mean of ED and a standard deviation of 12. You select a random sample of 9. (Refer to a ZScore table} Compute the probability that the sample mean is: a....

Consider the following table: a. Calculate the values of mean return and vanance for the stock fund. (Do not round intermediate calculations. Roun "Mean return" value to 1 decimal plece and...