A mortgage balance of $25,o00 is to be repaid over a 10-year term by equal monthly payments at 5.6% compounded semi-annually. At the request of the mortgagor, the monthly payments were set at $425. (a) How many payments will the mortgagor have to make? (b) What is the size of the last payment? (c) Determine the difference between the total amount required to amortize the mortgage with the contractual monthly payments rounded to the nearest cent and the total actual amount paid.

A mortgage balance of $25,o00 is to be repaid over a 10-year term by equal monthly payments at 5.6% compounded semi-annually. At the request of the mortgagor, the monthly payments were set at $425. (a) How many payments will the mortgagor have to make? (b) What is the size of the last payment? (c) Determine the difference between the total amount required to amortize the mortgage with the contractual monthly payments rounded to the nearest cent and the total actual amount paid.

Corporate Fin Focused Approach

5th Edition

ISBN:9781285660516

Author:EHRHARDT

Publisher:EHRHARDT

Chapter4: Time Value Of Money

Section4.17: Amortized Loans

Problem 1ST

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