Question

Suppose someone borrows $552,000 today to buy a house in Davis, CA. If the annual interest rate is 4%, with monthly compounding, what should be the fair value monthly mortgage payment?

Answer 1

Answer:

Monthly Repayment on Loan  = $2634.06

Explanation:

given data

principal =  $552,000

annual interest rate = 4% = 0.333% monthly

solution

for get here fair value monthly mortgage payment we consider here time period is 30 year = 360 months

so now we apply here Monthly Repayment on Loan formula that is

Monthly Repayment on Loan  = principal ×  $\frac{r(1+r)^t}{(1+r)^t -1}$    .................1

put here value and we get

Monthly Repayment on Loan  = 552000 × $\frac{r(1+0.333)^{360}}{(1+0.333)^{360} -1}$    

Monthly Repayment on Loan  = $2634.06