Reference no: EM133137423

Question 1- Shane purchased a house for $450,000. He made a down payment of 20.00% of the value of the house and received a mortgage for the rest of the amount at 6.72% compounded semi-annually amortized over 20 years. The interest rate was fixed for a 3 year period.

a. Calculate the monthly payment amount.

b. Calculate the principal balance at the end of the 3 year term.

c. Calculate the monthly payment amount if the mortgage was renewed for another 3 years at 6.62% compounded semi-annually?

Question 2 - A $200,000 mortgage was amortized over 10 years by monthly repayments. The interest rate on the mortgage was fixed at 4.70% compounded semi-annually for the entire period.

a. Calculate the size of the payments rounded up to the next $100.

b. Using the payment from part a., calculate the size of the final payment.

Question 3 - A mortgage for a condominium had a principal balance of $46,300 that had to be amortized over the remaining period of 6 years. The interest rate was fixed at 3.42% compounded semi-annually and payments were made monthly.

a. Calculate the size of the payments.

b. If the monthly payments were set at $812, by how much would the time period of the mortgage shorten?

c. If the monthly payments were set at $812, calculate the size of the final payment.

Question 4 - James planned to take a mortgage to purchase a house but could only afford to pay a maximum amount of $1,200 every month as mortgage payments. The variable open interest rate offered by his bank was 3.50% compounded semi-annually on mortgages amortized over 20 years. Calculate the maximum mortgage amount he will receive.