Question

Oppenheimer Bank is offering a 30-year mortgage with an APY (or effective annual rate) of 6.625%. If you plan to borrow $180,000, what will your monthly payment be?

Answer 1

EAR = [(1 +stated rate/no. of compounding periods) ^no. of compounding periods - 1]* 100

6.625 = ((1+Stated rate%/(12*100))^12-1)*100

Stated rate% = 6.432

PVOrdinary Annuity = C*[(1-(1+i/(f*100))^(-n*f))/(i/(f*100))]

C = Cash flow per period

i = interest rate

n = number of payments I f = frequency of payment

180000= Cash Flow*((1-(1+ 6.432/1200)^(-30*12))/(6.432/1200))

Cash Flow = 1129.685

Using Calculator: press buttons "2ND"+"FV" then assign

PV =-180000

I/Y =6.432/12

N =30*12

FV = 0

CPT PMT

Using Excel

=PMT(rate,nper,pv,fv,type)

=PMT(6.432/(12*100),12*30,,180000,)