ECON6033 A1 Solution.pdf - ECON6033 Corporate Finance Assignment 1 Solution Question 1(a = 1(1(1 1(1 5 1.5 5 1.5 120(1 12 12 = $48454 7,000,000 0.7 =

ECON6033 A1 Solution.pdf - ECON6033 Corporate Finance...

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  • ECON 6033
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ECON6033 Corporate Finance Assignment 1 Solution Question 1 (a) 𝑃? = ? ? (1 − 1 (1 + ?) 𝑛𝑇 ) 7,000,000 × 0.7 = ? 5% − 1.5% 12 (1 − 1 (1 + 5% − 1.5% 12 ) 120 ) ? = $48454 The monthly installment of the original mortgage is $48454. (b) Until Mar 1 st 2016, Mr. Wong has paid the installment for 26 months. 𝑅𝑒?𝑎𝑖?𝑖?𝑔 ?𝑎?𝑎?𝑐𝑒 = ? ? (1 − 1 (1 + ?) 𝑛𝑇 ) = 48454 5% − 1.5% 12 (1 − 1 (1 + 5% − 1.5% 12 ) 120−26 ) = $3,978,626 By replacing the old mortgage with the new mortgage, Mr. Wong borrowed $9,000,000 and repaid the old loan and therefore he will have a cash inflow of $(9,000,000*0.7-3,978,626)= $2,321,374. (c)
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