MCR$3$U Unit $3$ A Assignment: Modelling Exponentials & Finance

Determine the interest paid at the end of the five$-$year term.

Name: $q,$

$[2$ marks$]$

Assuming that your interest rate remains the same, you do not make any lump$-$sum payments, or miss any payments, determine the total interest paid at the end of the $25-$year amortization period.

$[2$ marks$]$

If you decide to change the amortization period to $20$ years $($from $25$ years$),$ but keeping the same interest rate of $($same as what you wrote in the chart$),$

a$)$ Determine what your new monthly payments will change to$.$

If you decide to change the frequency of your payments from monthly to bi$-$weekly, but keeping the same interest rate of $6,($same as what you wrote in the chart$),$ and maintaining the $25-$year amortization period,

a$)$ Determine what your new $($biweekly$)$ payments will become.

b$)$ Calculate how much interest will you now pay.

b$)$ Calculate how much interest will you now pay. $[1$ mark$]$

c$)$ Explain how changing the amortization period impacts the total amount of interest you will pay. $[1$ mark$]$

c$)$ Explain how changing the frequency period impacts the total amount of interest you will pay. $[1$ mark$]$

Provide some general advice to ANYONE considering taking out a mortgage, if their goal is to reduce their mortgage as fast as they can and also save as much interest as possible over the full amortization period?

$[2$ marks$]$