Repayments on a monthly basis

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1) Mary needs to borrow $250,000 to buy her home. She will make her repayments on a monthly basis and the loan period will be over a 25 year period. Use a home loan rate of 4%. How much will her repayments be?

2) Two years after Mary commenced repaying her loan, her employer gave her a promotion and with the extra money she would like to accelerate repayments on her home loan. She intends to continue to repay her loan monthly, but would like to know what her repayment would be to reduce her total loan term by 10 years (25 years - 10 years). Use a home loan rate of 4% per year throughout this problem (for discounting or compounding).

Reference no: EM132355808

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