A couple purchases a home worth $256,000 by paying $86,000 deposit and then taking out a mortgage at j12 = 7%. The mortgage will be amortised over 25 years with equal payments.
(i) Determine the monthly payments they make and create a partial amortization schedule showing the distribution of the first 6 payments as to interest and principal
(ii) How much of the principal is repaid in the first 6 months
(iii) How much is the outstanding balance on the 20th year
(iv) Recalculate the payment amount from 20th year if the interest rate changes to j12 = 8% with no change in the period of the loan.