Suppose you are buying your first home for $145,000, and you have $15,000 for your down payment.You have arranged to finance the remainder with a 30-year, monthly payment, amortized mortgage at a 6.5% nominal interest rate, with the first payment due in one month.What will your monthly payments be?
A) $741.57
B) $780.60
C) $821.69
D) $862.77
E) $905.91

Question

Quizplus · Accepted Answer

To find the monthly payment, use the formula for a fixed-rate mortgage: M = P[r(1+r)^n] / [(1+r)^n – 1], where P is the loan principal ($130,000), r is the monthly interest rate (0.065/12), and n is the total number of payments (360). Calculating this gives a monthly payment of approximately $821.69.

Suppose You Are Buying Your First Home for $145,000, and You