Question

A​ $240 000 mortgage is amortized over 20 years. If interest on the mortgage is​ 3.39% compounded​ semi-annually, calculate the size of monthly payments made at the end of each month.  

A. ​$1,378.38

B. ​$1,375.47

C. ​$1,700.00

D. ​$1,184.36

Answer 1

B. ​$1,375.47

Size of monthly payment		=-pmt(rate,nper,pv,fv)
		=1,375.47
Where,
rate	=	Monthly Interest rate			=	0.002805
nper	=	Number of period	=	20*12	=	240
pv	=	Present value of loan			=	2,40,000
fv	=	Future Value of Loan			=	0
Working:
Calculation of equivalent monthly interest rate:
(1+i)^n	=	(1+i)^n		Where,
(1+i)^6	=	(1+0.01695)^1		Semi annual interest rate	=	3.39%/2
1+i	=	1.01695	^ (1/6)		=	0.01695
1+i	=	1.002805253
i	=	0.002805