For each question, show all relevant work, including formulas and excel calculation tables.

6. A demand (variable rate) mortgage of $137 000.00 is amortized over 20 years by equal monthly payments. After 21 months the original interest rate of 6% p.a was raised to 6.6% p.a. Three years after the mortgage was taken out, it was renewed at the request for the mortgagor for a five-year term at a fixed rate of 7.25% p.a.

a) Calculate the mortgage balance after 21 months.

b) Compute the size of the new monthly payment at the 6.6% rate of interest.

c) Determine the mortgage balance at the end of the five-year term.

7. A $5000 bond that pays 6% semi-annually is redeemable at par in 14 years. Calculate the purchase price if it is sold to yield 8% compounded semi-annually.

8. A $200 000.00, 6% bond with semi-annual coupons is redeemable at par. What is the purchase price of the bond six years before maturity to yield 8% compounded semi-annually?

9. A $50 000 bond bearing interest at 5.5% payable semi-annually is redeemable at par on August 10, 2033. The bond is sold on the primary market on December 10, 2013, to yield 5% compounded semi-annually. Determine

a) calculate the market price;

b) the accrued interest;

c) the cash price.

10. A $10 000, 7.2% bond with semi-annual coupons is purchased 3 years before maturity. Calculate the discount or premium if the bond is sold to yield 6% compounded semi-annually.