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What would happen if the interest rate per year dropped

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Reference no: EM133007413

Your brother Mr Uji Moto has decided to purchase a house in Lavington estate and take out a 30-year mortgage. The mortgage amount is Kenya shillings 30 million. The bank charges interest at 8% per annum.

Problem 1: Consider what would happen if the interest rate per year dropped from 8%pa to 7%pa. How much of year 1 payment would go to paying interest and how much would go to reducing the principal?

Reference no: EM133007413

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