What is the outstanding balance

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1.mortgage has 25 years left, and has an APR of 7.625% with monthly payments of $1449.

a. What is the outstanding balance?

b. Suppose you cannot make the mortgage payment and you are in danger of losing your house to foreclosure. The bank has offered to renegotiate your loan. The bank expects to get $150,000 for the house if it forecloses. They will lower your payment as long as they will receive at least this amount (in present value terms). If current 25-year mortgage interest rates have dropped to 5% (APR), what is the lowest monthly payment you could make for the remaining life of your loan that would be attractive to the bank?

2.You have an outstanding student loan with required payments of $500 per month for the next four years. The interest rate on the loan is 9% APR (monthly). You are considering making an extra payment of $100 today (that is, you will pay an extra $100 that you are not required to pay). If you are required to continue to make payments of $500 per month until the loan is paid off, what is the amount of your final payment? What effective rate of return (expressed as an APR with monthly compounding) have you earned on the $100?

3.Consider again the setting of Problem 18. Now that you realize your best investment is to prepay your student loan, you decide to prepay as much as you can each month. Looking at your budget,you can afford to pay an extra $250 per month in addition to your required monthly payments of $500, or $750 in total each month. How long will it take you to pay off the loan?

Reference no: EM13490575

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