Problem 4-5 A fully amortizing mortgage loan is made for $116,000 at 6 percent interest for 20 years. Required: a. Calcu

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Problem 4-5
A fully amortizing mortgage loan is made for $116,000 at 6
percent interest for 20 years.
Required:
a. Calculate the monthly payment for a CPM
loan.
b. What will
the total of payments be for the entire 20-year
period? Of this total, how much will be the interest?
c. Assume the loan is repaid at the end of
eight years. What will be the outstanding balance? How much total
interest will have been collected by then?
d. The borrower now chooses to reduce the
loan balance by $6,600 at the end of year 8.
(1) What will be the new loan maturity assuming that loan
payments are not reduced?
(2) Assume the loan maturity will not be reduced. What will the
new payments be?