(Dick London 1.12) A 10 year adjustable rate mortgage loan of 23115 is being repaid exactly with quarterly installments of 1000 based on an initial interest rate of 12% compounded quarterly. Immediately after the 12th payment, the interest rate of 12% is increased to 14% compounded quarterly. The quarterly installments remain at 1000, so the term of the loan must be different.
Calculate the loan balance immediately after the 24th payment.
References
Hlynka, Myron. "University of Windsor Old Tests 62-392 Theory of Interest". web2.uwindsor.ca. Retrieved November 23, 2023.
Solution: E
Prospectively [math]L *=1000 a_{\overline{28} \mid .03}=1000(18.76411)=18764.11[/math]. is OB of loan after 12 payments. Loan balance after the 24 th payment (extra 12 payments) is (retrospectively) [math]18764.11(1+.035)^{12}-1000 s_{\overline{12} \mid .035}=13751.90[/math]
References
Hlynka, Myron. "University of Windsor Old Tests 62-392 Theory of Interest". web2.uwindsor.ca. Retrieved November 23, 2023.