You borrow $720,000 at 3.25% per year compounded monthly and you plan to pay off this loan in equal annual payments starting one year after the loan is made over a period of fifteen (15) years.

a. What are the annual end-of-year payments? Determine the amount of interest and principal that are paid each year. What is the total interest paid for the loan?

b. Restructure the loan in the previous question to make payments monthly. Determine the savings in interest overall.

c. Restructure your payment schedule once more to make payment every two weeks. Determine the savings in interest (if any) in this case (compare to both previous repayment options).

Expert Solution

Rahul Sunny answered 2 years ago

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