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What is the effective annual rate

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Reference no: EM133068305

You thought that the London property market is severely undervalued due to the recent collapse of the financial market and you believe the property market will rebound soon. Hence, you are considering buying a two-bedroom apartment for $500,000. You plan to make a $100,000 down payment and take a $400,000 30-year mortgage for the rest. The interest rate on the mortgage is 6% monthly APR.

(a) What is the effective annual rate?

(b) What is the monthly payment?

(c) How much do you owe the bank immediately after the fifteenth monthly payment? Hint: There is a very quick and a very slow way to answer part (c).

Reference no: EM133068305

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