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How much interest will you pay in the 13th year of a $120,000, 8.5%, 25 year...

How much interest will you pay in the 13th year of a $120,000, 8.5%, 25 year mortgage, assuming annual compounding?

a. 7,351.362

b. 7,514.997

c. 7,665.261

How much interest will you pay in the 12th year of a $120,000, 8.5%, 25 year mortgage, assuming monthly compounding? (Hint: 144-AMORT, you need to think about what should be entered for INPUT)

Hint: INPUT = AMORT - # of specified periods + 1

a.7,411.813

b.7,648.124

c.7,911.599

A reset mortgage allows for one interest rate reset during the life of the loan. The mortgage rate will be reset after 6 years, to fully amortize at the end of the original 30 year period (i.e. after 24 more years). For a 6.625%, $100,000, mortgage, please compute the reset payment if the new rate resets to 7.375%. (Hint: calculate how much balance is left after you pay for 6 years at the rate of 6.625%, then use the left balance as the new PV, pay it off for the rest of the 24 years @ the rate of 7.375%). Assuming monthly compounding.

First six years: 1-INPUT, 72-AMORT.

a. 450.76

b. 489.11

c. 652.37

d. 683.93

Expert Solution

Formulas will be as follows:

jeff jeffy answered 2 years ago

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