To calculate the outstanding mortgage balance at the end of year 5 (after 60 months) for a mortgage with the given parameters, we will first find the monthly payment and then determine the remaining balance at the end of 60 months.

Step-by-Step Solution

1. Determine the Monthly Payment: The monthly payment $M$ for a mortgage can be calculated using the formula:

   $M = P \frac{r(1 + r)^n}{(1 + r)^n - 1}$

   Where:

   • $P = 5,000,000$ (the principal amount)
   • $r = \frac{4.5\%}{12} = \frac{0.045}{12} = 0.00375$ (monthly interest rate)
   • $n = 20 \times 12 = 240$ (total number of payments)

2. Calculate the Remaining Balance: The outstanding balance after 60 months can be calculated using the formula for the remaining balance of a loan:

   $B = P \left( \frac{(1 + r)^n - (1 + r)^m}{(1 + r)^n - 1} \right)$

   Where:

   • $B$ is the remaining balance after $m = 60$ months.
   • Other variables remain as defined above.

Let's perform the calculations.The outstanding mortgage balance at the end of year 5 (after 60 months) is $4,134,999.52.

Would you like to see more details or have any questions?

Related Questions:

1. How does the interest rate impact the monthly payments and outstanding balance?
2. What would the outstanding balance be if the interest rate was 5% instead of 4.5%?
3. How would the remaining balance change if the amortization period was 30 years instead of 20 years?
4. What is the total interest paid during the first 5 years of this mortgage?
5. How can you calculate the monthly payment for any loan amount, interest rate, and term?

Tip: Understanding how the amortization period and interest rate affect loan repayments can help you make more informed decisions about borrowing and refinancing.