Question

Suppose you are buying your first condo for $145,000, and you will make a $15,000 down...

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? a. $741.57 b. $780.60 c. $821.69 d. $862.77 e. $905.91

Record all functions necessary to solve the problem with a financial calculator. (Why is "C" the correct answer?)

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Homework Answers

Answer #1

Information provided:

Price of the condo= $145,000

Down payment= $15,000

Mortgage= $145,000- $15,000 = $130,000

Time= 30 years*12= 360 months

Interest rate= 6.5%/12= 0.5417% per month

The monthly payment is computed by entering the below in a financial calculator:

PV= -130,000

N= 360

I/Y= 0.5417

Press the CPT key and PMT to compute the monthly payment.

The value obtained is 821.69.

Therefore, the amount of monthly payment is $821.69.

Hence, the answer is option c.

In case of any query, kindly comment on the solution.

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