A mortgage for a condominium had a principal balance of $44, 700 that had to be amortized over the remaining period of 6 years. The interest rate was fixed at 4.42% compounded semi-annually and payments were made monthly. Full solutions should be shown on separate sheets of paper. Submit your solutions. a. Calculate the size of the payments. Round up to the next whole number b. If the monthly payments were set at $808, by how much would the time period of the mortgage shorten? year(s) months

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A:

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Cost of Credit

The cost of credit is an extra amount that the borrower has to pay besides the loan amount. These credit charges may vary from loan to loan. The cost of credit includes interest charges, maintenance charges, and arrangement charges. Some of the costs are mandatorily collected by the lender based on the loan amount and tenure of the loan. The cost of credit is also called finance charges of the credit.