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Unformatted text preview: of i u 2 U u 10%? 5. Rachel has to make loan payments of $780 at the end of each month for the next two years to finish repaying a three year loan with interest at i u 12 U u 14%. Her loan contract stipulates an early repayment penalty equal to 3 months’ payments. Rachel is now able to obtain a 2 year loan at i u 2 U u 8%. Calculate the new monthly payment she would need to make if she refinanced her loan. Should she refinance? 6. Karen has a $200,000 mortgage. a. Calculate Karen’s regular monthly mortgage payment if the mortgage rate is 7% compounded semiannually and the mortgage is amortized over 20 years. b. Karen makes an extra payment (in addition to her regular monthly payment) of $1000 at the end of each year. Calculate the total amount of interest Karen will pay during the first 5 years. c. If Karen continues to make payments as described in part b), calculate how long it will take her to payoff the mortgage....
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This note was uploaded on 02/07/2010 for the course ACTSC 231 taught by Professor Chisholm during the Spring '09 term at Waterloo.
- Spring '09