Reference no: EM132139874

Marlene decides to take the investor's offer. She buys the business and begins paying the $5,000 monthly payments to the investor. Shortly thereafter, she realizes what a bargain she found. She's learned that, because of its excellent location, the land and building alone are worth more than she paid for the entire business. She reads that mortgage rates are very attractive these days. She then begins to wonder if she could refinance the business with a bank, pay off the investor, get some of her own investment back fairly soon and lower her monthly payment - all at the same time. An appealing thought! So, she approaches a local bank. The bank has the property appraised and agrees to a mortgage of $450,000, which would allow Marlene to pay off the investor and reduce her equity investment in the business by $25,000. The bank loan would be repayable over 20 years with interest at 4.75%, compounded monthly. Payments are due at the end of each month. Intuitively, she thinks there will be a substantial savings in the monthly payments she is required to make. But she's not quite sure and asks you to help her with the financial calculations. What will be the amount of her monthly mortgage payment?