A couple purchased a home and signed a mortgage contract for $700, 000 to
be paid with half-yearly payments over a 25-year period. The interest rate
applicable is j2 = 9% p.a. applicable for the rst ve years, with the condition
that the interest rate will be increased by 3% every 5 years for the remaining
term of the loan.
Based on the given information, your group is required to use Excel software
to:
(a) Calculate the half-yearly payment required for each ve-year interval
[10 marks]
(b) Calculate the loan outstanding (outstanding balance) at the beginning
of each ve year interval. [10 marks]
(c) Prepare a loan amortization table for the nal 12 half-years of the
loan term. [10 marks]
Answers
A couple purchased a home and signed a mortgage contract for $500; 000 to
be paid with half-yearly payments over a 25-year period. The interest rate
applicable is j2 = 8:5% p.a. applicable for the rst ve years, with the condition
that the interest rate will be increased by 4% every 5 years for the remaining
term of the loan.
Based on the given information, your group is required to use Excel software
to:
(a) Calculate the half-yearly payment required for each ve-year interval
[10 marks]
(b) Calculate the loan outstanding (outstanding balance) at the beginning
of each ve year interval. [10 marks]
(c) Prepare a loan amortization table for the nal 12 half-years of the
loan term. [10 marks]A couple purchased a home and signed a mortgage contract for $500; 000 to
be paid with half-yearly payments over a 25-year period. The interest rate
applicable is j2 = 8:5% p.a. applicable for the rst ve years, with the condition
that the interest rate will be increased by 4% every 5 years for the remaining
term of the loan.