Assume that you arrange a mortgage loan of $100,000 at j2 15% (i.e. 15% nominal annual...

 

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Assume that you arrange a mortgage loan of $100,000 at j2 15% (i.e. 15% nominal annual rate compounded semi-annually) amortized over 25 years with monthly payments and a 5 year term. You are permitted to prepay up to 10% of the initial principal each year. (a) (6 marks) If you prepay 10% of the initial principal at the end of the second year, what will be the OSB of the loan at the end of the term? (b) (3 marks) What is the amortization period for the remaining loan since the end of the term if j2 = 15% and your monthly payment remains the same? How does this compare to what it would have been with no prepayment? Assume that you arrange a mortgage loan of $100,000 at j2 15% (i.e. 15% nominal annual rate compounded semi-annually) amortized over 25 years with monthly payments and a 5 year term. You are permitted to prepay up to 10% of the initial principal each year. (a) (6 marks) If you prepay 10% of the initial principal at the end of the second year, what will be the OSB of the loan at the end of the term? (b) (3 marks) What is the amortization period for the remaining loan since the end of the term if j2 = 15% and your monthly payment remains the same? How does this compare to what it would have been with no prepayment?

Answer rating: 100% (QA)

Given Principal loan amount 100000 Nominal annual interest rate compounded semiannually 2 15 Amortiz... View the full answer