The Interest Rate for the First Five Years of a $142,000

question 167

Essay

The interest rate for the first five years of a $142,000 mortgage is 5.8% compounded semi-annually. Monthly payments are based on a 25-year amortization. If a $3,000 prepayment is made at the end of the third year:
a) How much will the amortization period be shortened?
b) What will be the principal balance at the end of the five-year term?

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Definitions:

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The process or strategy employed by businesses to increase their net earnings or reduce costs to the greatest extent possible.

Marginal Revenue Curve

A graph that shows the additional revenue a firm earns from selling one more unit of a good or service.

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