Question: You plan to purchase a $500,000 house using a 20 year Adjustable Rate Mortgage (ARM)from a local bank at 4% interest rate. You'll make a

You plan to purchase a $500,000 house using a 20 year Adjustable Rate Mortgage (ARM)from a local bank at 4% interest rate. You'll make a down payment of 20% of the purchase price.

a. Calculate your monthly payment on this mortgage.

b. Construct the amortization schedule for the first six months.

c. What will be the new installment if after 12 month the interest rate is adjusted to 6%.

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