b) Your friend who lives in England has obtained a $250,000 mortgage. The mortgage is amortized...

b) Your friend who lives in England has obtained a $250,000 mortgage. The mortgage is amortized over 25 years and the term of the mortgage is 25 years. The mortgage interest rate is 9% compounded annually. He will begin making annual payments of $25,451.56 at the end of the year.

(i) What is the principal outstanding immediately after he makes his fifth payment?

(ii) How much of your friend’s fifth payment is interest?

(iii) How much has he paid in principal and what is the total amount of interest he has paid at the end of year five?

Please answer with calculations (and ASAP)! Thanks!

Solutions

Expert Solution

Calculations-

Note -
Interest = Opening balance *Interest rate
Principalpaid = Installment - Interest
Closing balance = Opening balance - Principalpaid

I have made the amortization table upto 5th year as the requirement in question is upto 5th year.

Please upvote if the ans is helpful.In case of doubt,do comment.Thanks.

jeff jeffy answered 1 year ago

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