EnergyMax Engineering constructed a small office building for their firm 5 years ago. They financed it with a bank loan for $450,000 over 15 years at 6% interest with quarterly payments and compound ing. The loan can be repaid at any time without penalty. The loan can be refinanced through an insur ance firm for 4% over 20 years—still with quarterly compounding and payments. The new loan has a 5% loan initiation fee, which will be added to the new loan. (a) What is the balance due on the original mort gage (20 payments have been made in the last 5 years)? (b) How much will Energy Max's payments drop with the new loan? (c) How much longer will the proposed loan run? ?plz do fast
EnergyMax Engineering constructed a small office building for their firm 5 years ago. They financed it with a bank loan for $450,000 over 15 years at 6% interest with quarterly payments and compound ing. The loan can be repaid at any time without penalty. The loan can be refinanced through an insur ance firm for 4% over 20 years—still with quarterly compounding and payments. The new loan has a 5% loan initiation fee, which will be added to the new loan. (a) What is the balance due on the original mort gage (20 payments have been made in the last 5 years)? (b) How much will Energy Max's payments drop with the new loan? (c) How much longer will the proposed loan run? ?plz do fast
Chapter19: Lease And Intermediate-term Financing
Section: Chapter Questions
Problem 19P
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Concept explainers
Mortgages
A mortgage is a formal agreement in which a bank or other financial institution lends cash at interest in return for assuming the title to the debtor's property, on the condition that the obligation is paid in full.
Mortgage
The term "mortgage" is a type of loan that a borrower takes to maintain his house or any form of assets and he agrees to return the amount in a particular period of time to the lender usually in a series of regular equally monthly, quarterly, or half-yearly payments.
Question
EnergyMax Engineering constructed a small office building for their firm 5 years ago. They financed it with a bank loan for $450,000 over 15 years at 6% interest with quarterly payments and compound ing. The loan can be repaid at any time without penalty. The loan can be refinanced through an insur ance firm for 4% over 20 years—still with quarterly compounding and payments. The new loan has a 5% loan initiation fee, which will be added to the new loan.
(a) What is the balance due on the original mort gage (20 payments have been made in the last 5 years)?
(b) How much will Energy Max's payments drop
with the new loan? (c) How much longer will the proposed loan run?
?plz do fast
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