FIN 2081- What are the monthly payments
Subject: Business   / Finance
Question
You have taken out a 30-year fixed-rate mortgage for $500,000.00 that requires you to make a fixed monthly payment every month for the next 360 months, with the first payment being made exactly one month from now. The stated interest rate is 4 percent, compounded monthly.
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How do i work this out on paper?
a. What are the monthly payments?
b. For the first payment, what is the amount of that payment that repays principle?
c. Right after you make the first monthly payment (i.e., essentially one month from now), using your answers to be above, what will be the remaining principle on the loan?
