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4. If at the beginning of the 6th year the nominal rate drops to 12% compounded quarterly, what is the new amount of the weekly payment?

4. If at the beginning of the 6th year the nominal rate drops to 12% compounded quarterly, what is the new amount of the weekly payment?

Essentials Of Investments
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
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Only answer question 4

you are a personal finance advisor at the BQ bank, and you receive in your office a young couple who want to buy an apartment, the value of which is estimated at $350,000. You require them to make a minimum down payment of 5%, i.e. $17,500 that they should pay cash, and for the rest of the loan you offer them a financing plan at the nominal rate of 15% capitalized quarterly, over a period of 25 years.

According to your estimates:

1. How much will this couple have to pay each week to pay off the mortgage? (52 weeks per year).

 2. How much interest is paid over the term of the mortgage?

 3. What is the mortgage balance at the end of the 5th year?

 4. If at the beginning of the 6th year the nominal rate drops to 12% compounded quarterly, what is the new amount of the weekly payment?

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