What is the effective annual rate on mortgage

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Mr. Brown bought a house for $360,000 exactly five years ago. After making a 20% down-payment, he borrowed the rest of the house payment in the form of a 15-year mortgage from his local cooperative credit union. He negotiated a mortgage rate of 2.5% APR with semi-annual compounding. He makes mortgage payments of an equal dollar amount every two weeks (i.e., biweekly), and his first mortgage payment was due two weeks after he signed the mortgage contract.

a. What is the effective annual rate on Mr. Brown’s mortgage?

b. What is the effective biweekly interest rate on Mr. Brown's mortgage?

c. What is Mr. Brown’s biweekly mortgage payment?

d. If Mr. Brown can renegotiate a new 10-year mortgage rate of 2.5% APR with monthly compounding on his current mortgage balance, what will be his new biweekly mortgage payment?

Reference no: EM131863154

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