You took out a $500,000 fully amortizing loan at a variable interest rate of 3.2% pa and a term of 30 years. Ten months later, just after your tenth monthly payment, the bank increases the interest rate to 4.8% pa.

Assume that rates were and are expected to remain constant.

Save your time - order a paper!

Get your paper written from scratch within the tight deadline. Our service is a reliable solution to all your troubles. Place an order on any task and we will take care of it. You won’t have to worry about the quality and deadlines

Order Paper Now

Which of the following statements is NOT correct?


The monthly payment at the original interest rate of 3.2% was $2,162.33


After the rate changes to 4.8%, the monthly payment is $2,612.47


The principal outstanding at the time of the rate change (T=10) is $483,948.16


If you want to keep the same monthly payment after the rate change, and the bank allows you to pay the loan over a longer period, it will take 602 months to repay the loan.


From the bank’s point of view, the interest rate change represents an increase in the income return on a debt asset.


"Looking for a Similar Assignment? Get Expert Help at an Amazing Discount!"