ECO 1192A

White Assignment

C.Théoret

Fall 2013

A.

Assignment Instructions

1.

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8.

Consult the Excel assignment allocation file on Virtual Campus for your assignment. You will get a zero score for completing a different assignment.

You require a WHITE Scantron for the answers to a WHITE assignment.

The colour of your Scantron is identified by a “Highlighter” mark in its upper right-hand corner.

The “Course Code” on the Scantron answer sheet for this assignment is

ECO1192AW. Do not forget to darken the appropriate ovals.

Answer sheets

• will be distributed by the instructor at the November 26th lecture

• are to be submitted at 7 pm at the December 3rd lecture.

Each assignment is worth 10% of the overall course grade.

Late Scantron sheets will most definitely be rejected.

B.

Problems and Questions

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QUESTIONS 1 to 10

•

The Reasonable Loan Company is happy to offer you a 20-year (i.e.,

240 months) $500,000 mortgage with monthly blended payments consisting of the interest expense on the mortgage balance and the partial repayment of the mortgage. The Quick Loan Company’s interest rate on mortgages is 6% compounded monthly.

•

Assume that all transactions costs are nil.

1|Page

1.

What is the monthly mortgage payment (to the nearest 10 dollars)?

a) $2080;b) $3460; c) $3580; d) $3790; e) None of these answers.

2.

How much of the loan is repaid at the end of the first month (to the nearest

10 dollars)?

a) $0; b) $1080; c) $2500; d) $3580; e) None of these answers.

3.

What interest expense is included in the first repayment (to the nearest 10 dollars)? a) $0; b) $1080; c) $2500; d) $3580; e) None of these answers.

4.

How much of the loan is repaid at the end of the 50th month (to the nearest

10 dollars)?

a) $1080; b) $1380; c) 1390; d) $1450; e) None of these answers.

5.

What interest expense is included in the 50th repayment (to the