Berset Inc. (BI) has just issued semi-annual coupon bonds with 12 years to maturity and a face value of $1,000 per bond. The bonds make semi-annual coupon payments of $60. What is the price of one BI-bond today? Assume that at that time, the yield-to-maturity (APR, semi-annually compounded) is 12.4%. Suppose the Bersets took out a mortgage with an amortization period of 20 years, an effective monthly rate of 0.5353%, and a monthly mortgage payment of $2447. If the outstanding principal balance on the Bersets mortgage in five years from today (right after making the 60th monthly payment) is $282266, what would be the principal portion of their 61st mortgage payment?

Answer rating: 100% (QA)

a To calculate the price of one BIbond today we will use the Present Value PV formula for a bond Pri... View the full answer