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1. Formosan Freedom Co. purchased an office at newly built World Trade Center for $2,812,500.

The Company obtained a 30 year fixed rate mortgage at a 7.2% annual rate and paid 20% down. After five years, the Company had excess cash and decided to pay off the remaining balance. At that time the Company could obtain a mortgage with an annual interest rate at 7%. How much must the Company pay to retire the mortgage (to the nearest dollar)?

2. In July 2006, Forrest purchased a town house at $325,000 and paid 25% down. The mortgage that he obtained is a 30-year fixed-rate with an annual percentage interest rate of 5.75%. In July 2011, due to a fall in interest rates, he decided to refinance and obtained a mortgage at a 5.1% annual interest rate for 25 years. After he refinanced, how much is the payment reduced assuming that all payments were made on time?

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Financial Management, Finance

Category:- Financial Management
Reference No.:- M93048742

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