A couple buys a home and signs a mortgage contract for $200,000 to be paid with monthly payments over a 25-year period at i^(2) = 0.04.
What is the monthly payment?
The confusing part for me is the interest rate, how do I know which one to use?
I'm thinking I have to convert i^(2) to i^(12) then use j=i^(12)/12.
Is there a quick relationship I can use to convert the interest rate? Currently I'm converting i^(2) to annual interest rate then back to i^(12)
K* annuity(n)j = 200 000 and solve for K