Question

1. You have just taken out a 30‑year mortgage on your new home for $126,142. This mortgage is to be repaid in 360 equal monthly installments. If the stated (nominal) annual interest rate is 15.4 percent, what is the amount of each of the monthly installments? (Note: The convention when periodic payments are involved is to assume that the compounding frequency is the same as the payment frequency, unless stated otherwise. Thus this implies 15.4 % APR, compounded monthly for this problem. To compute the correct payment, do not round your interest rate too much.)

2. A bank is paying 7.5% APR on a CD. (Note: The convention when there are no periodic payments is to assume annual compounding, unless stated otherwise. Thus this is annual compounding.) If you put $2,604 into an account, how much will the account be worth in 5 years? Answer to 2 decimal places.

Answer 1