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Hazel needs to plan how large a mortgage she can afford. How much would she need...

Hazel needs to plan how large a mortgage she can afford. How much would she need to pay monthly on a mortgage of $200 000 at six percent interest, calculated semi-annually and amortized over 30 years? Select one:

a. $1111 b. $555 c. $1190 d. $1199

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Answer #1

Answer-

Mortgage amount = Present value = PV = $ 200000
Interest rate = 6 % annually
Interest rate semiannually = (1 + 0.06)1/2  - 1
= 1.060.5  - 1
= 1.02956 - 1
= 0.02956
= 2.956 % [ semi annually ]

Monthly rate = 2.956 % / 6 = 0.493 %
Number of periods = 30 x 12 = 360 [ 30 x 12 months  = 360 ]
Future Value = $ 0

Monthly payments = PMT = ?

EMIs = PMT = $ 1188.32

Therefore the correct option is c. $ 1190 ~ $ 1188.32

Therefore the monthly EMI = $ 1190

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