What is the equilibrium price per DVD?
1 answer:
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In this case we have an ARM fixed for 6 years and adjust after the initial first 6 years every 2 years after. The basic idea behind a ARM is that the interest changes periodically, but since our ARM is fixed for 6 years, our going to calculate the monthly payment during the initial period using the formula: 
where
is the monthly payment
is the amount
is the interest rate in decimal form
is the number years
First we need to convert our interest rate of 4% to decimal form by dividing it by 100%:
We also know from our question that
and 
, so lets replace those values into our formula to find the monthly payment:
We can conclude that the monthly payment during the initial period is $1071.58<span />
where
First we need to convert our interest rate of 4% to decimal form by dividing it by 100%:
We also know from our question that
We can conclude that the monthly payment during the initial period is $1071.58<span />