Question

Velida took out a 5/1 variable-rate mortgage for $150,000. The interest rate

Answer 1

Answer:

B

Step-by-step explanation:

The amortization period in months is:

30 years * 12 = 360 months

The monthly interest rate would be 5.25%/12 = 0.004375

The payment for monthly mortgage formula would be:

$E=\frac{C*r}{1-(1+r)^{-n}}$

Where

E is the monthly mortgage payment

C is the cost of mortgage, cost is $150,000

r is the monthly rate of interest, which is 0.004375

n is the period, in months, which is 360

Substituting, we get our answer:

$E=\frac{C*r}{1-(1+r)^{-n}}\\E=\frac{150,000*0.004375}{1-(1+0.004375)^{-360}}\\E=\frac{656.25}{1-(1.004375)^{-360}}\\E=\frac{656.25}{0.7923}\\E=828.31$

So, the correct answer is B