A fully amortizing CPM loan is made for $150,000 at 5% interest rate for 20 years with monthly repayments.
1. Calculate the monthly debt service.
2. What will be the outstanding loan balance at the end of year 10 and how much total interest will have been paid on the loan by then?
3. If the borrower chooses to reduce the loan balance by $20,000 at the end of year 10, when will the loan be fully repaid if the borrower keeps paying the same amount every month as previously agreed?