The interest rate for the first five years of a $120,000 mortgage is 7% compounded semi-annually. Monthly payments are based on a 25-year amortization. If a $5,000 prepayment is made at the end of the second year,
a) How much will the amortization period be shortened?
b) What will be the principal balance at the end of the five-year term?

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The Answer of The interest rate for the first five years of a $120,000 mortgage is 7% compounded semi-annually. Monthly payments are based on a 25-year amortization. If a $5,000 prepayment is made at the end of the second year,
a) How much will the amortization period be shortened?
b) What will be the principal balance at the end of the five-year term?

The Interest Rate for the First Five Years of a $120,000