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Computing the current outstanding balance

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(a) A debt of $2,000 will be repaid by monthly payments of $600 for as long as necessary, the first payment to be made at the end of 6 months. If interest is at j12 = 9%, find the size of the debt at the end of 5 months and make out the complete amortization schedule starting at that time.

(b) Five years ago a $200,000 mortage was taken out at j2 = 8% with monthly payment $1,200. Now after the 5 years the mortgage is renegotiated with the following conditions:

(i) A penalty of $2000 is added to the current outstanding balance;

(ii) The new interest rate is j2 = 5%;

(iii) The new balance will be amortized over 15 years. Find the new monthly payment.

Reference no: EM132477900

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