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:

$\displaystyle PV = R(1-(1+i)^-n) / i $

I then rearrange the formula:

$\displaystyle R =PV * i / (1-(1+i)^n $

Now I plugged in the numbers into formula:

$\displaystyle 95000 * 0.0236 / (1-(1+ 0.0236)^-20)$

=$6013.68 per month