What is your monthly mortgage payment

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Reference no: EM132187675

Problem - Mortgage Financing

(a) You borrowed an amount P0 on a 30-year mortgage at r annual interest rate compounded daily. What is your monthly mortgage payment M30?

(b) Your employer pays you on a biweekly schedule instead of on a monthly schedule. You want to make a mortgage payment every two weeks in the amount of M30/2. How many years sooner can you finish paying off your mortgage? Your answer should be independent of P0.

(c) Now suppose you borrowed P0 on a 15-year mortgage at r annual interest rate compounded daily. What is your monthly mortgage payment M15?

(d) How much less do you pay for the house overall with the mortgage in (c) compared to the mortgage in (a)?

Reference no: EM132187675

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