Paul borrowed $500000 from the bank for mortgage. The interest rate is 7.8% compounded monthly. a. Convert the interest rate above as the effective interest rate. b. To pay off the mortgage debt within 30 years, how much is his monthly payment (to the nearest cent)? c. Build the amortization schedule based on part b, including the correct final payment to make the final balance equal to zero. d. Paul actually may afford $3400 every month as the mortgage payment. How many years+months will he need to pay off the mortgage? e. Build the amortization schedule based on part d, including the correct final payment to make the final balance equal to zero. f. Find out

Paul borrowed $500000 from the bank for mortgage. The interest rate is 7.8% compounded monthly. a. Convert the interest rate above as the effective interest rate. b. To pay off the mortgage debt within 30 years, how much is his monthly payment (to the nearest cent)? c. Build the amortization schedule based on part b, including the correct final payment to make the final balance equal to zero. d. Paul actually may afford $3400 every month as the mortgage payment. How many years+months will he need to pay off the mortgage? e. Build the amortization schedule based on part d, including the correct final payment to make the final balance equal to zero. f. Find out

EBK CFIN

6th Edition

ISBN:9781337671743

Author:BESLEY

Publisher:BESLEY

Chapter4: Time Value Of Money

Section: Chapter Questions

Problem 25PROB

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Concept explainers

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.

Question

Paul borrowed $500000 from the bank for mortgage. The interest rate is 7.8% compounded monthly.

a. Convert the interest rate above as the effective interest rate.

b. To pay off the mortgage debt within 30 years, how much is his monthly payment (to the nearest cent)?

c. Build the amortization schedule based on part b, including the correct final payment to make the final balance equal to zero.

d. Paul actually may afford $3400 every month as the mortgage payment. How many years+months will he need to pay off the mortgage?

e. Build the amortization schedule based on part d, including the correct final payment to make the final balance equal to zero.

f. Find out

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