Larry makes Linda a loan with zero payments and negative amortization at a semi annual compounding (j2) rate of 3%. While no payments are due until the end of the term after 20 years, interest accrues monthly. The initial loan amount is $100,000. (a) What will be the monthly interest rate (i12)? (b) What will be the outstanding balance after 20 years?
Mortgages
A mortgage is a formal agreement in which a bank or other financial institution lends cash at interest in return for assuming the title to the debtor's property, on the condition that the obligation is paid in full.
Mortgage
The term "mortgage" is a type of loan that a borrower takes to maintain his house or any form of assets and he agrees to return the amount in a particular period of time to the lender usually in a series of regular equally monthly, quarterly, or half-yearly payments.
Larry makes Linda a loan with zero payments and negative amortization at a semi annual compounding (j2) rate of 3%. While no payments are due until the end of the term after 20 years, interest accrues monthly. The initial loan amount is $100,000.
(a) What will be the monthly interest rate (i12)?
(b) What will be the outstanding balance after 20 years?
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