The mortgage on your house in Winnipeg is 5 years old. It required monthly payments of $1402,
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The new mortgage has a 30-year term, requires monthly payments, and has an interest rate of 6.625% (APR with monthly compounding which is typical for U.S. mortgages).
a. What monthly repayments will be required with the new loan?
b. If you still want to pay off the mortgage in 25 years, what monthly payment should you make on your new mortgage?
c. Suppose you are willing to continue making monthly payments of $1402. How long will it take you to pay off the new mortgage?
d. Suppose you are willing to continue making monthly payments of $1402 and want to pay off the new mortgage in 25 years. How much additional cash can you borrow today as part of the new financing?
Compounding
Compounding is the process in which an asset's earnings, from either capital gains or interest, are reinvested to generate additional earnings over time. This growth, calculated using exponential functions, occurs because the investment will...
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Related Book For
Fundamentals of Corporate Finance
ISBN: 978-0133400694
1st canadian edition
Authors: Jonathan Berk, Peter DeMarzo, Jarrad Harford, David A. Stangeland, Andras Marosi
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