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How much is the original monthly repayment

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Now that they have accumulated a deposit of $120,000, Joe and Jenny wish to use the deposit and take out a housing loan to purchase a home. The home costs $720,000. The loan is to be repaid in equal monthly instalments over a term of 30 years. Jenny recalls that the interest rate quoted by the bank is an annual nominal rate of 4.8%pa compounded monthly. After 10 years (120th repayment just made), the bank announces the interest rate will change to an annual nominal rate of 4.2%pa compounded monthly.

(i) How much is the original monthly repayment?

(ii) How much is the monthly repayment after the interest rate fall, assuming the term is unchanged?

Reference no: EM132491539

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