What is the monthly payment size of a 25-year mortgage for $100 000 and an interest rate of 6% compounded semi-annually?

Question

Quizplus · Accepted Answer

The first step is to convert the interest rate from a semi-annual to a monthly rate. 
Semi-annual rate = 6%
Monthly rate = 6%/2 = 0.03

Next, we can use the formula for calculating the monthly mortgage payment:

M = P * (r(1+r)^n) / ((1+r)^n - 1)

Where:
M = Monthly payment
P = Principal (amount borrowed) = $100,000
r = Monthly interest rate = 0.03
n = Total number of monthly payments = 25 years * 12 months/year = 300

Plugging in the numbers, we get:

M = 100000 * (0.03*(1+0.03)^300) / ((1+0.03)^300 - 1) 
M = $639.81

Therefore, the monthly payment will be $639.81.

What Is the Monthly Payment Size of a 25-Year Mortgage