A $140,000 Mortgage Loan Charges Interest at 6

question 72

Short Answer

A $140,000 mortgage loan charges interest at 6.6% compounded monthly for a four-year term. Monthly payments were calculated for a 15-year amortization and then rounded up to the next higher $10.
a) What will be the principal balance at the end of the first term?
b) What will the monthly payments be on renewal for a three-year term if it is calculated for an interest rate of 7.2% compounded monthly and an 11-year amortization period, but again rounded to the next higher $10?

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Definitions:

Random Samples

The selection of a subset of individuals from a larger set where each member of the subset has an equal probability of being chosen. This ensures that the sample represents the overall population.

Homogeneous

Composed of parts or elements that are all of the same kind; not heterogeneous.

Representative

Serving as a typical example of a group or category of things; in statistics, it refers to a sample that accurately reflects the characteristics of the larger population.

Correlation

A statistical measure that indicates the extent to which two or more variables fluctuate together.