Question

Oppenheimer Bank is offering a 30-year mortgage with an EAR of 4.625%. If you plan to borrow $160,000, what will your monthly payment be? Your monthly payment will be $(Round to the nearest cent.)
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Answer #1

Borrowing = $ 160000, Tenure = 30 years or 360 months and EAR = 4.625 % per annum or 0.3854% per month

Let the equal annul repayments be $ K and lets assume a monthly compounding

Therefore,160000 = K x (1/0.003854) x [1-{1/(1.003854)^(360)}]

K = $ 822.604

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