Calculate the size of the monthly mortgage loan payment if a $121,500 loan at 7% compounded semi-annually is to be paid off over 18 years.

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The correct calculation involves using the formula for a fixed-rate mortgage, which is often represented as $M = P\frac{r(1+r)^n}{(1+r)^n-1}$, where $M$ is the monthly payment, $P$ is the principal loan amount, $r$ is the monthly interest rate (annual rate divided by 12), and $n$ is the total number of payments (years times 12). Given a 7% annual interest rate compounded semi-annually, we first adjust this to a monthly rate by dividing by 12, but since it's compounded semi-annually, we use the effective annual rate formula to adjust the interest rate. However, for simplicity in common mortgage calculations, we directly use the nominal rate divided by 12 for monthly calculations. For an 18-year term, or 216 months, the calculation is plugged into the formula. The closest match to the correct calculation based on the options provided is $983.75.

Calculate the Size of the Monthly Mortgage Loan Payment If