Question

1. Ada purchased a house using a fixed rate mortgage. The annual interest rate is 6.3%

Answer 1

The monthly  payment on the mortgage is option C) $2537.44

Step-by-step explanation:

• Principal (P): $ 295,000
• Rate (r): 6.3%  = 0.063
• Number of times compounded (n): 12months$\times$15 years = 180
• Number of years = 15

The formula is A = P(1 + r/n)^nt

⇒ A = 295000(1+0.063/180)^(180$\times$15)

⇒ A = 295000(180.063/180)^2700

⇒ A = 295000 (1.00035)^2700

⇒ A = 758854.5

Interest = Amount - Principle

⇒ 758854.5 - 295000

⇒ Interest = 463854.5

∴ The monthly payment for 15 years = 463854.5 / (15$\times$12)

The monthly  payment on the mortgage = 2576.9 (approximately option C)