A mortgage of 198,000 is to be amortized by monthly payments over 22.5 years. If the...

A mortgage of 198,000 is to be amortized by monthly payments over 22.5 years. If the payments are mafe at the end of each month and interest is 8.75% compounded semi-amnually, what is the size of monthly payments?

Expert Solution

First we have to compute the semi-annual rate to EAR and then monthly rate

EAR =	8.94%
(1+8.75%/2)^2-1

Annual rate compounding monthly =	8.59%
((1+8.94%)^(1/12)-1)*12

Put in calculator

FV		0
PV		-198000
I	8.59%/12	0.7162%
N	22.5*12	270

compute PMT		$1,659.78

ans =		$1,659.78

jeff jeffy answered 2 years ago

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