Sean and Friends Bought a Property Valued at $50 000

question 71

Essay

Sean and friends bought a property valued at $50 000 for $5000.00 down and a mortgage amortized over 10 years. The group makes equal payments due at the end of every three months. Interest on the mortgage is 6.00% compounded annually and the mortgage is renewable after five years.
a) What is the size of each quarterly payment?
b) What is the outstanding principal at the end of the five-year term?
c) What is the cost of the mortgage for the first five years?
d) If the mortgage is renewed for a further five years at 9% compounded semi-annually, what will be the size of each quarterly payment?

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