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A $110,000 mortgage was amortized over 10 years by monthly repayments. The interest rate on the...

A $110,000 mortgage was amortized over 10 years by monthly repayments. The interest rate on the mortgage was fixed at 5.90% compounded semi-annually for the entire period.

a. Calculate the size of the payments rounded up to the next $100.

b. Using the payment from part a., calculate the size of the final payment.

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Answer #1

a. Number of monthly payments, n = 10 * 12 = 120

Effective monthly interest rate, r = (1 + 0.0590/2)^(1/6) - 1

r = 0.004857299867

r = 0.4857299867%

Monthly payment rounded up to the next 100 is $1,300

b. The size of the final payment is also equal to $1,211.7877698578

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