New Venture Corporation has taken out a $5 million, 30-year, 10% mortgage on its new manufacturing facility.
a. How much will New Venture pay each month to discharge this mortgage?
b. How much of the first payment is for interest, and by how much does it reduce the balance owed?
c. How much of the second payment is for interest, and by how much does it reduce the balance owed?
How can I solve b and c from the attached solution (solution to a)? Thank you.
Extracted text: The mortgage refers to the type of loan that requires collateral against the loan. The lender of the mortgage provides the facility to repay the full amount in periodic installments. This system reduces the burden of the borrower. the monthly installment requires less payment. This can determine as follows: r(1+r Monthly payments = principal- (1+r)-1 Here, r = monthly interest rate t = no. of months The given information: Mortgage amount=$ 5 million Duration (t)= 30 years= (30 x 12=360 months), Interest rate (r)= 10% annually (10/12=0.83334%) The monthly payments for the mortgage are: r(1+r) Monthly payments=principal- (1+ry-1 0.008334(1.008334)360 =5, 0000, 0000- (1.008334)60 – 1 (0.008334)(19.8421215626) =5, 000, 000 (19.8421215626)-1 =5, 000, 000-0.165352335 18.8421215626 =5, 000, 000(0. 008775775) =$43, 878. 37518 Hence, the monthly installment for the $ 5 million mortgages is $ 43,878.37518