MAP4C Lesson Assignment 18 | Mortgages

MAP4C Lesson Assignment 18
In this assignment you are going to focus on: Mortgages.
Total Marks: 64 marks
Instructions:
After completing the lesson action section of your home page, you are ready to complete your lesson assignment. Follow
these steps.
a) In the textbox given, explain the strategy that you used to determine your answer.
b) Fill in your answer. The mark for each question is given at the introduction to the questions to be completed.
c) When finished answering all your questions, save your file and upload the file into the appropriate dropbox.
Part A (Putting the Concepts to Work): Completion (64 marks): Using your reading, answer the following
questions. Give your answer as well as your strategy for determining your answer. As part of your answer, give the page
number in the reference material or the website that you used to find the answer to the question.
1. (four marks) Determine the monthly payment for a five-year fixed rate mortgage of $260 000 amortized over
25 years at an annual interest rate of 6.49%.
Here, P = 260000 , r = 6.49 % , n = 12 , Y = 25
PMT = ( P∗r
n )/ [1−(1+ r
n )−nY
]
Putting the respective values and solving in Excel we get
PMT = $1753.91
2. (four marks) Calculate the total amount paid over the term of a five-year fixed rate mortgage of $260 000
amortized over 25 years at an annual interest rate of 6.49%.
Here, P = 260000 , r = 6.49 % , n = 12 , Y = 5
PMT = ( P∗r
n )/ [ 1−( 1+ r
n )
−nY
]
Putting the respective values and solving in Excel we get
PMT = $1753.91
Total amount paid: 1753.91*12*25 = $ 526173
MAP4C Lesson Assignment Page 1

3. (four marks) Calculate the total principal paid over the term of a five-year fixed rate mortgage of $260 000
amortized over 25 years at an annual interest rate of 6.49%.
Total principal paid: $260000
4. (four marks) Calculate the total interest paid over the term of a five-year fixed rate mortgage of $260 000
amortized over 25 years at an annual interest rate of 6.49%.
Total interest paid : ($ 526173 - $260000) = $266173
5. (four marks) Calculate the approximate value of a $260 000 house after five years if it has an appreciation
rate of 6% per year.
MAP4C Lesson Assignment Page 2

6. (four marks) Consider this amortization table for the first six months of a $195 000 mortgage amortized over
15 years.
Month Principal Paid ($) Interest Paid ($)
1 594.87 1200.13
2 598.53 1196.47
3 602.21 1192.79
4 605.93 1189.08
5 609.64 1185.35
6 613.41 1181.60
Calculate the total amount paid in the first six months.
Month Principal Paid ($) Interest Paid ($)
1 594.87 1200.13
2 598.53 1196.47
3 602.21 1192.79
4 605.93 1189.08
5 609.64 1185.35
6 613.41 1181.60
Total principal paid: 3624.59
Total interest paid: 7145.42
7. (four marks) Consider this amortization table for the first six months of a $195 000
mortgage amortized over 15 years.
Month Principal Paid ($) Interest Paid ($)
1 594.87 1200.13
2 598.53 1196.47
3 602.21 1192.79
4 605.93 1189.08
5 609.64 1185.82
6 613.41 1181.60
Calculate the total principal paid in the first six months.
MAP4C Lesson Assignment Page 3