Question

The Grewals agreed to monthly payments on a mortgage of $363,000.00 amortized over 25 years. Interest for the first five years was 4.3% compounded semi-annually.

a. Determine the Grewals’ monthly payments.

b. Determine the balance owing after the 5-year term.

c. Before renewing for another term of 5 years at 4.5% compounded semiannually, the Grewals make an additional payment of $21,000. If they keep the same monthly payments, by how much will the amortization period be shortened?

note; sir i need the full method that how you done it

Answer 1

The answers are as follows:

Please note that we can solve this question using financial Calculator. for Conversion, CNUR n = Number of compoundings per annum. I'%. - Given Interest Rate.. Eff= Effective Interest Rate APR = Annual Percentage Rate also called - Nominal Interest Rate. for Compounding, CMPP Set: Begin End no Number of periods or Number of Annuities I%= Interest per period. PV = Present Value. PMT = Amount of each Annuity. fv = future Value bo onu te for Amortisation ,

nc nu T num - We will use AMRT function, and solve - BAL to get outstanding balance of loan. Now first convert 4.3.1. per annum compounded semi- annually to effective Rate ie per annum. CNUR n=2 1. = 4.3 Eff - SOLVE 4.346225 - Now, convert Effechive Rate into Nominal Rate i.e. þer annum compounded monthly n=12 1:/- 4. 366 22C APR - SOLVE 4.261977705 Over- annum 00 Solution to (a): Set : End no 25X12 - 300 1%. 4.261977705-12 = 0.355164809 PV = 363000

Solution to (c): After payment of 60 equal monthly instalments, number of payment period remaining is = 300-60= 240. i. After additional payment of $21000, Duetstanding Balance = 317636.5064- 21000 = $296636.5064. Now, we will use CNPD function to calculate number of periods hat will take to pay outstanding balance at a monthly instalment of our 1988.944634. CMPO Set: End na SOLVE 216.02797 7% = 0.355164809 PV296636.5064 PMTO - 1968.944634 - FV= 0 o. The amortization beered will be shortened by = 240 - 216.02797 = 23.97203 = 24 months LOR, - 23.97203 +12=1.997669167: 2 Years (approx).