MATH CLASS 2- HOMEWORK

MATH 2- HOMEWORK
GOBC Real Estate • Mortgage Notes
• PAYMENT
• N
• OUTSTANDING BALANCE
• PRINCIPAL REDUCTION

www.GOBCrealestate.com
 MATH CLASS 2- HOMEWORK

Homework for MATH 2:

1. 1). Solve Payment questions pages 24-25
2. 2). Solve N questions pages 26
3. 3). Solve Outstanding (OSB) and Principal Reductions (PR) Questions pages 27-28
4. 4). Watch the videos for the next class (Math class 3)

PAYMENT_______________________________________________________________________

16. A $70,000 mortgage loan, written at a nominal rate of 17% per annum, compounded annually, has a two-year
contractual term. Payments are made monthly and are based on a 20-year amortization period. Payments are
rounded to the next higher dollar. What is the size of the required payments ?
(1) $ 975.00 (3) $ 1,027.00
(2) $ 997.00 (4) $ 964.00

17. Ally has recently received an interest only loan for $75,000 to operate a food cart in downtown Vancouver. The loan
has an interest rate of 6% per annum, compounded monthly, and requires interest only payments every month. How
much are the monthly interest only payments that Ally makes if the duration of the loan is two years?
(1) $750 (3) $375
(2) $500 (4) $1,000

18. Calculate the monthly payment required for the following mortgage: Principal of $40,000; 14% per annum,
compounded semi-annually; amortization period of 20 years.
(1) $486.47
(2) $486.08
(3) $469.56
(4) $497.41

19. Brad has recently received an interest only loan for $100,000 to operate a food cart in downtown Vancouver. The
loan has an interest rate of 8% per annum, compounded monthly, and requires interest only payments every month.
How much are the monthly interest only payments that Brad makes if the duration of the loan is two years?
(1) $1,333.33
(2) $666.67
(3) $500.33
(4) $1,200.67

Answers: 16(4), 17(3), 18(2), 19(2)

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 20. As one lowers a discount (or expected yield) rate, the present value of a given series of future payments:
(1) decreases. (3) increases.
(2) could go up or down depending on the timing (4) remains constant.
of the payments.

21. Sam and Sally recently negotiated a second mortgage in the amount of $24,000 at an interest rate of 19% per annum,
compounded semi-annually. The loan is to be amortized over twenty years by equal quarterly payments. What is the
size of the quarterly payment to be made by Sam and Sally?
(1) $1,114.17
(2) $369.74
(3) $1,144.49
(4) $388.97

22. A $70,000 mortgage loan, written at a nominal rate of 17% per annum, compounded semi-annually, has a two-year
contractual term. Payments are made monthly and are based on a 20-year amortization period. Payments are
rounded to the next higher dollar. What is the size of the required payments?
(1) $ 975.00
(2) $ 997.00
(3) $1,027.00
(4) $ 983.00

23. A vendor is willing to sell his house for $96,000. He demands 24 monthly payments, and payment of the outstanding
balance in the amount of $75,000 with the 24th payment. He wishes to earn an effective annual rate of 15% on his
money. What is the monthly payment required?
(1) $1,159.87
(2) $1,923.24
(3) $1,599.23
(4) $1,887.47

24. A borrower has arranged a loan of $196,000 at an interest rate of 6% per annum, compounded annually over an
amortization period of 15 years. What is the monthly payment required?
(1) $1,386.30
(2) $1,543.86
(3) $1,262.84
(4) $1,637.18

25. A $1,410,000 construction loan is written at 21 ½ % per annum, compounded semi-annually and requires interest
only payments monthly. The amount of those payments is:
(1) $24,082.24
(2) $24,028.42
(3) $23,492.17
(4) $24,200.06

26. A $195,000 mortgage loan was written one year ago at 17 ¾ % per annum, compounded monthly. At the end of its 5-
year term, the borrower will owe $191,591.33 on the loan. What is the amount of each monthly payment, rounded to
the next higher cent?
(1) $2,719.06
(2) $4,925.24
(3) $2,920.05
(4) $2,933.65

©2022 GOBC Training LTD Answers: 20(3), 21(3), 22(2), 23(4), 24(4), 25(4), 26(3) 25
N_____________________________________________________________________

27. Joanne Carmichael borrows $15,000 at a periodic interest rate of 0.5% per month. She agrees to repay $450 per
month. For how many FULL years will Joanne have to make payments?
(1) 3
(2) 9
(3) 27
(4) 37

28. A mortgage was written for $30,000 with interest at J2 = 12% and monthly payments of $325.00 for as long as
necessary. How many payments of $325.00 were required?
(1) 238
(2) 242
(3) 236
(4) 237

29. Joe Carmichael borrows $11,000 at a periodic interest rate of 0.75% per month. He agrees to repay $335 per month.
For how many FULL years will Joe have to make payments?
(1) 3
(2) 9
(3) 27
(4) 37

30. A loan has an original loan amount of $12,500, a term of 7 years, an interest rate of 16.5% per annum, compounded
semi-annually and has monthly payments of $169.50. What is the amortization period of this loan?
(1) 84 months
(2) 300 months
(3) 299.244200328 months
(4) impossible to determine from the information
provide

Answers: 27(1), 28(4), 29(1), 30(3)

©2022 GOBC Training LTD 26

 MATH CLASS 2- HOMEWORK

OUTSTANDING BALANCE_________________________________________________
31. A borrower is arranging a third mortgage with Brass Knuckle Finance Company. The loan amount is $17,000, the
interest rate is 21.5% per annum, compounded semi-annually, the amortization period is 15 years and the contractual
term is 2 years. If payments are made monthly and rounded up to the next higher $10, calculate the outstanding
balance at the end of the loan term.
(1) $16,542.73
(2) $16,579.53
(3) $16,464.31
(4) $16,758.22

32. A borrower is arranging a third mortgage with Brass Knuckle Finance Company. The loan amount is $17,000, the
interest rate is 21.5% per annum, compounded monthly, the amortization period is 15 years and the contractual term
is 2 years. If payments are made monthly and rounded up to the next higher $10, calculate the outstanding balance at
the end of the loan term.
(1) $16,614.51
(2) $16,317.91
(3) $16,839.34
(4) $16,542.73

33. A mortgage was written for $48,000.00 with an interest rate of J2 = 8%, an amortization period of 15 years and equal
monthly payments. Calculate the balance owing at the end of five years.
(1) $38,506.94
(2) $37,724.15
(3) $47,289.10
(4) $46,181.28

34. Big Al negotiated a mortgage loan of $99,362.47, with an amortization period of 20 years, an interest rate of 15% per
annum, compounded semi-annually, and monthly payments. What would be the outstanding balance at the end of the
three-year term of this loan?
$96,368.19 (2) $96,195.19 (3) $99,362.48 (4) $93,177.00

35. A borrower is arranging a third mortgage with Brass Knuckle Finance Company. The loan amount is $17,200, the
interest rate is 21.5% per annum, compounded semi-annually, the amortization period is 15 years and the contractual
term is 2 years. If payments are made monthly and rounded up to the next higher $10, calculate the outstanding
balance at the end of the loan term.
(1) $16,765.20
(2) $16,579.52
(3) $16,464.31
(4) $16,480.70

©2021 GOBC Training LTD Answers: 31 (3), 32(4), 33(2), 34(2), 35(1)
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 MATH CLASS 2- HOMEWORK
36. A mortgage was written for $176,000 with an interest rate of j2=6.5%, an amortization period of 15 years, and
monthly payments. Calculate the outstanding balance owing at the end of five years, rounded to the nearest dollar.
(1) $150,637
(2) $146,984
(3) $141,986
(4) $134,795

37. A loan in the amount of $84,000 has been arranged. The loan bears interest at 17.5% per annum, compounded semi-
annually, and has a term of five years and an amortization period of 20 years. Payments are to be monthly and are to
be rounded up to the next higher dollar. What is the outstanding balance on the mortgage at the end of the term?
(1) $80,009.05
(2) $80,204.53
(3) $82,281.99
(4) $79,949.33

PRINCIPAL REDUCTION___________________________________________

38. Calculate the amount by which the principal is reduced during the five-year term of a $159,000 mortgage at J2 = 12%
with a 20-year amortization. Assume the monthly payments are rounded to the next higher cent and paid when due.
The principal reduction is:
(1) $ 89,583.16
(2) $ 13,541.84
(3) $145,458.16
(4) $ 296.36

39. Steelgrave Developments is contemplating the construction of a large residential building. They have been guaranteed
financing by their bank in the amount of $1,500,000. The terms of the financing are J2 = 9.75% with a 20-year
amortization period, 5-year term, and monthly payments. Steelgrave believes that if market conditions are favourable,
they will sell the building when it is completed, 2 years from now. Calculate how much the principal of the loan will
have been reduced at the end of the two-year construction period.
(1) $ 53,825.96
(2) $ 55,071.93
(3) $160,074.65
(4) $ 0.00

40. Calculate the amount by which the principal is reduced during the five-year term of a $159,000 mortgage at J12 = 12%
with a 20-year amortization period. Assume the monthly payments are rounded to the next higher cent and paid
when due. The principal reduction is:
(1) $ 289.11
(2) $ 13,541.84
(3) $145,873.23
(4) $ 13,126.77

©2021 GOBC Training LTD Answers: 36(4), 37(4), 38(2), 39(2), 40(4) 28