Exam 14: Amortization of Loans, Residential Mortgages, and Sinking Funds

A car loan of $46 700.00 is amortized over 8 years by equal monthly payments at 2.9% compounded monthly. What is the monthly payment and outstanding principal balance after 40 payments.

Kirk had accumulated $975 000 in his RRSP at the age of 55. He converted the RRSP into an RRIF at that time and started withdrawing $5000 at the beginning of each month. If interest is 4.5% compounded monthly, what is the size of his final withdrawal?

Rebecca borrowed $20 400 from her local credit union to pay for the upgrades in her kitchen. She wants to pay the loan with monthly payments over the period of 3 years. What is the interest included in the tenth payment, if the rate charged by the credit union is 6% monthly?

John makes a monthly mortgage payment of $1940 at the end of every month. On October 31, his loan balance was $145 000 after making a payment of $1940. His financial institute allows him to make one additional payment equal to or less than his monthly payment, once a month. Taking advantage of that, John made a payment of $1500 on November 15 and $1900 on December 20. What is his year-end balance after making monthly payment on December 31? The effective monthly fixed rate is 0.306%.

What is the outstanding balance after the 23rd payment interval of a 16-year loan for $14 734 with semi-annual payments and an interest rate of 5.95% compounded quarterly?

A contract valued at $47 500.00 requires payments of $6951.00 every six months. The first payment is due in four years and interest is 6.6% compounded semi-annually. a) How many payments are required? b) What is the size of the last payment? c) How much will be paid in total? d) How much of what is paid is interest?

The owner of the Pink Flamingo Motel borrowed $19 500.00 at 8.11% compounded semi-annually and agreed to repay the loan by making payments of $1110.00 at the end of every three months. a) How many payments will be needed to repay the loan? b) How much will be owed at the end of five years? c) How much of the payments made at the end of five years will be interest?

A debt of $43 100.00 is repaid by payments of $3350.00 made at the end of every six months. Interest is 8.4% compounded quarterly. a) What is the number of payments needed to retire the debt? b) What is the cost of the debt for the first five years? c) What is the interest paid in the 11th payment? d) Construct a partial amortization schedule showing details of the first three payments, the last three payments, and totals.

A loan of $19 000.00 is repaid by quarterly payments of $900.00 each at 8% compounded quarterly. What is the principal repaid by the 21st payment?

What is the outstanding balance after the 23rd payment interval of a 16-year loan for $14 734 with semi-annual payments and an interest rate of 5.95% compounded quarterly?

A contract worth $59 000.00 provides benefits of $21 000.00 at the end of each year. The benefits are deferred for six years and interest is 8.95% compounded quarterly. a) How many payments are to be made under the contract? b) What is the size of the last benefit payment?

John has agreed to purchase his partner's share in real estate by making payments of $5000.00 every three months. The agreed transfer value is $40 000.00 and interest is 10% compounded annually. If the first payment is due at the date of the agreement, what is the size of the final payment?

A bank has an interest rate of 5% compounded semi annually for a five year closed mortgage. If the mortgage has monthly payments, calculate the effective rate of interest per each term.

A $30 000.00 mortgage is amortized by monthly payments over twenty years and is renewable after five years. a) If the interest rate is 8.5% compounded semi-annually, calculate the outstanding balance at the end of the five-year term. b) If the mortgage is renewed for a further three-year term at 8% compounded semi-annually, calculate the size of the new monthly payment. c) Calculate the payout figure at the end of the three-year term.

Far East Imports Inc. owes $64 000.00 to be repaid by monthly payments of $2475.00. Interest is 6.12% compounded monthly. a) How many payments will Far East Imports Inc. have to make? b) How much interest is included in the 15th payment? c) How much of the principal will be repaid by the 17th payment? d) Construct a partial amortization schedule showing details of the first three payments, the last three payments, and totals.

The owner of the Guelph Inc. borrowed $20 000.00 at 1.2% compounded semi-annually and agreed to repay the loan by making payments of $1000.00 at the end of every three months. a) How many payments will be needed to repay the loan? b) How much will be owed at the end of five years?

A demand (variable rate) mortgage of $137 000.00 is amortized over 20 years by equal monthly payments. After 21 months the original interest rate of 6% p.a was raised to 6.6% p.a. Three years after the mortgage was taken out, it was renewed at the request for the mortgagor for a five-year term at a fixed rate of 7.25% p.a. a) Calculate the mortgage balance after 21 months. b) Compute the size of the new monthly payment at the 6.6% rate of interest. c) Determine the mortgage balance at the end of the five-year term.

A mortgage balance of $137 960.70 is to be repaid over an eleven-year term by equal monthly payments at 8.1% compounded semi-annually. At the request of the mortgagor, the monthly payments were set at $1140.00. a) How many payments will the mortgagor have to make? b) What is the size of last payment? c) Determine the difference between the total actual amount paid and the total amount required to amortize the mortgage by the contractual monthly payments.

A $176 000.00 mortgage is to be repaid over a 21-year period by monthly payments rounded up to the next higher $100.00. Interest is 9.44% compounded semi-annually. a) Determine the number of rounded payments required to repay the mortgage. b) Determine the size of the last payment.

A factory valued at $100 000.00 is purchased for a down payment of 28% and payments of $4000.00 at the end of every three months. If interest is 9% compounded monthly, calculate the size of the final payment.