Determine the annual mortgage payment

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Question - Suppose a firm enters into a redemption mortgage loan (annuity loan) for $300,000 for 20 years (240 months) at a mortgage rate of 6%.

a) Determine the annual mortgage payment and fill in an amortization schedule as shown below for the first three years and the last two years.

b) Determine the remaining debt after 20 years.

c) Determine the total amount of interest payment over the total life of the mortgage.

d) What would be the monthly payment (interest plus repayment) if the loan is served monthly?

e) Show the equation from which the effective interest rate can be calculated if payments occur annually and the bank charges a loan origination fee of $500 when the loan is issued.

Reference no: EM132814720

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