You take out an adjustable rate mortgage for $100,000 for 20 years. For the first 5 years, the rate is 3%. It then rises to 6% for the next 10 years and then 8% for the last 5 years.
a. What is the payment for the first 5 years?
b. At the end of 5 years, how much have you paid towards the principal? How much is left?
c. Using the amount of principal left as the new present value, determine the payment for the next 10 years.
d. At the end of 15 years (the first 5 plus the next 10), how much have you paid towards the principal? How much is left?
e. Using the amount of principal left as the new present value, determine the payment for the last 5 years fo the loan.
f. Over the entire 20 years, how much have you paid?