Answer:New Monthly Payments = $1613.81
Explanation:
Present Value = $ 325000( 1 -0.25) = 243750
n = 30 x 12 = 360
R = 5.75%/12
Monthly payments (30 year Bond) = rPV/(1 - (1+R)^-n)
Monthly payments (30 year Bond) =(0.0575/12 x 243750)/ (1 - (0.0575/12^-30))
Monthly payments (30 year Bond) = 1167.9687338/ 0.1335983624
Monthly payments (30 year Bond) = 8742.38810013 = 8742.39
Balance of the loan in 5 years
Balance = PV(1+r)^n - P((1+r)^n -1)/r
Balance = 243750(1 + 0.0575)^5 - 8742.39((1 + 0.0575)^5 - 1)/0.0575
Balance = 322363.9769 - 49036.27513 =273327.70177
Balance = 273327.70
New Monthly Payments = (0.0510/12 X 273327.70 )/ (1 - (1 + 0.510/12)^-300)
New Monthly Payments = 1161.642725/ 0.7198130660
New Monthly Payments = 1613.811684 = $1613.81
