(a) Determine the number of rounded payments required to repay the mortgage. (b) Determine the size of the last payment. (c) Calculate the amount of interest saved by rounding the payment up to the next higher $100 versus rounding the payment to the nearest cent.
(a) Determine the number of rounded payments required to repay the mortgage. (b) Determine the size of the last payment. (c) Calculate the amount of interest saved by rounding the payment up to the next higher $100 versus rounding the payment to the nearest cent.
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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Question
A $96,000 mortgage is to be repaid over a fifteen-year period by monthly payments rounded up to the next-higher $100. Interest is 7.7% compounded semi-annually.
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(a)
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Determine the number of rounded payments required to repay the mortgage.
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(b)
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Determine the size of the last payment.
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(c)
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Calculate the amount of interest saved by rounding the payment up to the next higher $100 versus rounding the payment to the nearest cent.
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