A housing loan of $400,000 was to be repaid over 20years by monthly installments of an annuity-immediate at the nominal rate of 5% per year. After the 24th payment was made, the bank increased the interest rate to 5.5%.
a) If the lender was required to repay the loan within the same period, how much would be the increase in the monthly installment?
b) If the installment remained unchanged, how much longer would it take to pay back the loan?
