Question

A $180,000 mortgage is to be amortized by making end of the month payments for 25 years. Interest is 5.62% compounded semi-annually for a four-year term. Compute the size of the monthly payment.

Answer 1

The monthly payment for the mortgage is approximately $1,197.40

Step-by-step explanation:

To compute the monthly payment for the mortgage, we can use the formula:

Monthly Payment = P * r * (1 + r)^n / ((1 + r)^n - 1)

Where:

• P = Principal amount (mortgage amount) = $180,000
• r = Monthly interest rate = Annual interest rate / 12 = 5.62% / 12 = 0.0468
• n = Total number of payments = 25 years * 12 months/year = 300

By substituting the given values into the formula, we can calculate the monthly payment:

Monthly Payment = $180,000 * 0.0468 * (1 + 0.0468)^300 / ((1 + 0.0468)^300 - 1)

Using a calculator, the approximate monthly payment is $1,197.40.