The Taylors agreed to monthly payments rounded up to the nearest $100 on a mortgage of $175000 amortized over 15 years. Interest for the first five years was 6.25% compounded semi- annually. After 30 months, as permitted by the mortgage agreement, the Taylors increased the rounded monthly payment by 10%. a) Determine the mortgage balance at the end of the five-year term. b) If the interest rate remains unchanged over the remaining term, how many more of the increased payments will amortize the mortgage balance? c) How much did the Taylors save by exercising the increase-in-payment option?
The Taylors agreed to monthly payments rounded up to the nearest $100 on a mortgage of $175000 amortized over 15 years. Interest for the first five years was 6.25% compounded semi- annually. After 30 months, as permitted by the mortgage agreement, the Taylors increased the rounded monthly payment by 10%. a) Determine the mortgage balance at the end of the five-year term. b) If the interest rate remains unchanged over the remaining term, how many more of the increased payments will amortize the mortgage balance? c) How much did the Taylors save by exercising the increase-in-payment option?
Pfin (with Mindtap, 1 Term Printed Access Card) (mindtap Course List)
7th Edition
ISBN:9780357033609
Author:Randall Billingsley, Lawrence J. Gitman, Michael D. Joehnk
Publisher:Randall Billingsley, Lawrence J. Gitman, Michael D. Joehnk
Chapter7: Using Consumer Loans
Section: Chapter Questions
Problem 9FPE: Calculating and comparing add-on and simple interest loans. Eli Nelson is borrowing 10,000 for five...
Related questions
Question
hand written solve with explanation i'll give multiple upvote
Transcribed Image Text:The Taylors agreed to monthly payments rounded up to the nearest $100 on a mortgage of
$175000 amortized over 15 years. Interest for the first five years was 6.25% compounded semi-
annually. After 30 months, as permitted by the mortgage agreement, the Taylors increased the
rounded monthly payment by 10%.
a) Determine the mortgage balance at the end of the five-year term.
b) If the interest rate remains unchanged over the remaining term, how many more of the increased
payments will amortize the mortgage balance?
c) How much did the Taylors save by exercising the increase-in-payment option?
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
Step by step
Solved in 4 steps
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, finance and related others by exploring similar questions and additional content below.Recommended textbooks for you
Pfin (with Mindtap, 1 Term Printed Access Card) (…
Finance
ISBN:
9780357033609
Author:
Randall Billingsley, Lawrence J. Gitman, Michael D. Joehnk
Publisher:
Cengage Learning
EBK CONTEMPORARY FINANCIAL MANAGEMENT
Finance
ISBN:
9781337514835
Author:
MOYER
Publisher:
CENGAGE LEARNING - CONSIGNMENT
Excel Applications for Accounting Principles
Accounting
ISBN:
9781111581565
Author:
Gaylord N. Smith
Publisher:
Cengage Learning
Pfin (with Mindtap, 1 Term Printed Access Card) (…
Finance
ISBN:
9780357033609
Author:
Randall Billingsley, Lawrence J. Gitman, Michael D. Joehnk
Publisher:
Cengage Learning
EBK CONTEMPORARY FINANCIAL MANAGEMENT
Finance
ISBN:
9781337514835
Author:
MOYER
Publisher:
CENGAGE LEARNING - CONSIGNMENT
Excel Applications for Accounting Principles
Accounting
ISBN:
9781111581565
Author:
Gaylord N. Smith
Publisher:
Cengage Learning
Principles of Accounting Volume 1
Accounting
ISBN:
9781947172685
Author:
OpenStax
Publisher:
OpenStax College
Intermediate Accounting: Reporting And Analysis
Accounting
ISBN:
9781337788281
Author:
James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:
Cengage Learning