Calculate the principal balance at end of the five-year term, Finance Basics

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Calculate the principal balance at end of the five-year term

Problem

Shannon purchased a house for $450,000. He made a downpayment of 15% of the value of the house and received a mortgage for the rest of the amount at 6.50% compounded semi-annually for 25 years. The interest rate was fixed for a 5-year term.

1. Calculate the size of the monthly payments.

2. Calculate the principal balance at the end of the 5-year term.

3. Calculate the size of the monthly payments if after the first 5-year term the mortgage was renewed for another 5-year term at 6.25% compounded semi-annually?

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