Reference no: EM133000689

Emily just bought a condo in downtown Vancouver, and the purchase price is $750,000.  For this condo purchase, she used her savings to pay for the down payment of 20% of the purchase amount and received a mortgage for the remaining amount from her bank. The bank provided the mortgage rate at 1.80% APR semi-annual compounding at 5 years fixed rate term. The mortgage required Emily to make equal monthly payment and she chose 25-year amortization.

Using financial calculator or appropriate financial formula, please calculate the followings. Describe your calculation steps where applicable.

Problem 1. What is the monthly mortgage payment amount Emily needs to pay? And how much Emily will owe to the bank if she sells her condo after 5 years?

Problem 2. If Emily were to determine if she makes a profit/loss in selling her condo after 5 years, what relevant cash flows would she need to consider in her quantitative analysis?

Problem 3. If Emily does not sell her condo in 5 years and she can borrow the outstanding mortgage amount with the same mortgage rate for the next 10 years, what would be the total interest Emily would have paid over 15 years?