Question

A $86,000 mortgage is to be amortized by making monthly payments for 25 years. Interest is 5.1% compounded semi-annually for a six-year term.

​(a)	Compute the size of the monthly payment.
​(b)	Determine the balance at the end of the six-year term.
​(c)	If the mortgage is renewed for a six-year term at 6​% compounded semi-annually, what is the size of the monthly payment for the renewal​ term?

​(a) The size of the monthly payment is ​$__.

​(Round the final answer to the nearest cent as needed. Round all intermediate values to six decimal places as​ needed.)

​(b) The balance at the end of the six-year term is $__.

​(Round the final answer to the nearest cent as needed. Round all intermediate values to six decimal places as​ needed.)

​(c) The size of the monthly payment for the renewal term is $__.

​(Round the final answer to the nearest cent as needed. Round all intermediate values to six decimal places as​ needed.)

Answer 1

Yearly rate of 5.1% compounded semi annually is equal to yearly nominal rate of 5.046642% compounded monthly as follows:

Question (a):

Monthly payments of original loan= $505.09 as follows:

Question (b):

Balance at the end of 6 year term= $73,969.91

Relevant portion of amortization schedule as follows:

Question (c):l

APR of 6% compounded semi annually is equal to 5.926346%   compounded monthly as follows:

Monthly payments of renewed loan, for the renewal term= $557.96 as follows: