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Jim plans to pay off a $450,000 loan in 15 years. To achieve this goal, he...

Jim plans to pay off a $450,000 loan in 15 years. To achieve this goal, he makes equal payments at the end of each fortnight based on an annual nominal interest rate of r^(26) = 4.5%.

(a) Show that the size of these fortnightly payments is $1,587.71.

(b)At the end of four years, Jim takes a mortgage holiday for six months. How much will his fortnightly payments now change by so he can still pay off the loan in the original 15 years?

(c) Suppose at the end of seven years, the annual nominal interest rate drops to r^(26) = 3.25%. How much can Jim now top up his loan by, so to enable the original loan to be still paid off in 15 years while paying $1,587.71 per fortnight?

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ekkarill92 answered 1 year ago
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