(3) Suppose you are buying your first condo for $145,000, and you will make a $15,000 down payment. You have arranged to finance the remainder with a 30-year, monthly payment, amortized mortgage at a 6.5% nominal interest rate, with the first payment due in one month. What will your monthly payments be?

In the given question, we have to find out the monthly payment. In this case, the interest rate is divided by 12 months and the years are multiplied by the 12 months

So,

The interest rate would be = 6.5% ÷ 12 months = 0.541%

The total months would be = 30 years × 12 months = 360 months

And, the present value would be equal to

= First condo amount - down payment

= $145,000 - $15,000

= $130,000

The calculation is shown in the spreadsheet. Kindly find the attachment

Parrain Parrain · Answer 2 · 2022-04-05T13:51:26+02:00

Based on the interest rate, the loan amount, and the period of payment, the monthly payments will be $821.69.

What are the monthly payments?

First find the monthly interest:

= 6.5% / 12

= 6.5/12%

Period:

= 12 x 30

= 360 months

The loan amount:

= Cost of condo - down payment

= 145,000 - 15,000

= $130,000

The monthly payments can be found by the present value of an annuity formula:

Present value of loan = Payment x ( 1 - (1 + rate) ^ - number of periods) / rate

130,000 = Payment x (1 - ( 1 + 6.5/12%)⁻³⁶⁰) / 6.5/12%

Payment = 130,000 / 158.21

= $821.69

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