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Calculate the half-yearly payment required

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Question - A couple purchased a home and signed a mortgage contract for $900,000 to be paid with half-yearly payments over a 25-year period. The interest rate applicable is j2 = 5.5% p.a. applicable for the first five years, with the condition that the interest rate will be increased by 12% every 5 years for the remaining term of the loan.

(a) Calculate the half-yearly payment required for each five-year interval.

(b) Calculate the loan outstanding (outstanding balance) at the beginning of each five year interval.

Reference no: EM133018432

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