What would be debt service payment in the first year

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ABC Financial Corporation has agreed to give you a constant payment mortgage loan of $10 million for the purchase of a property. Per the terms of the loan, the mortgage constant is 8.72%; amortization term is 20 years; the term to maturity is 5 years; interest rate is 6% and is compounded annually, and the debt service payments are due once a year at the end of the year.

Problem 1: If the loan were a constant amortization mortgage the amortization period was 30 years (instead of 20 years), "B" wants to know what would be debt service payment in the first year? Show your calculations.

(a) $600,000

(b) $333,333

(c) $633,333

(d) $933,333

Reference no: EM132937486

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