Two partners have decided to acquire a more expensive manufacturing facility. One of the partners researched and found a factory selling for $25 million. The partners went to a local bank to discuss the mortgage options for the factory. The bank managers provided the following offers:

Offer 1

• 30-Year Mortgage to be repaid in equal monthly installments

• No Closing costs

• 5.7% APR

Offer 2

• 20-Year Mortgage to be repaid in equal monthly installments

• No Closing Costs

• Exact APR with the previous offer

The following tasks are required:

1- What are the monthly payments for a 30-year traditional mortgage? What are the payments for a 20-year traditional mortgage?

2- Prepare an amortization table for the first six months of the traditional 30-year and 20-year traditional Mortgage. How much of the first payment goes toward the principal? How much is the total payment for the first six months for a 30-year and 20-year Traditional Mortgage?

3- Which mortgage plan would you go with according to total payment? Explain your reasoning.

Answer rating: 100% (QA)

Answer 1 What are the monthly payments for a 30year traditional mortgage What are the payments for a 20year traditional mortgage The monthly payments for a 30year traditional mortgage can be calculate... View the full answer