Paula has bought a condo and requires a mortgage of $95,000. A trust company offers her a 20yr mortgage at 4.72%/a compounded semi-annually. The equivalent monthly rate is determined to be 0.003895204.
Q. a) Calculate the monthly payment.
b) Calculate the total interest paid on this mortgage.
a) I figure to use the formula:
I then rearrange the formula:
Now I plugged in the numbers into formula:
=$6013.68 per month
You seem a bit confused on the units of time.
is the annual nominal interest rate. 20 is the number of years for the loan.
is the semi-annual effective interest rate. 40 is the number of half-years for the loan.
is the monthly effective interest rate. 240 is the number of months for the loan.
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