13. Suppose you are buying your first condo for $440,000, and you will make a $30,000 down payment. You have arranged to finance the remainder with a 30-year, amortized mortgage at a 5.4% interest rate. You will make monthly payments with the first payment due in one month. Assuming that the sellers accept the offer, what will your monthly payments be

monthly payments will  be $2,302

Explanation:

This question requires us to calculate the  monthly payments (PMT) on the mortgage with the following data ;

PV = ($440,000 - $30,000) = $410,000

N = 30 x 12 = 360

P/yr = 12

I = 5.4%

FV = $ 0

PMT = ?

Using a Financial Calculator to input the data as above, the PMT can be determined as $2,302. Therefore, the monthly payments will be $2,302.

Notes

Important to note that we remove the down payment of $30,000 from the principle amount. There is no time value of money effect on this amount.

Also compounding is done monthly thus there are 12 period in the year

disadvantages of leasing a vehicle: no vehicle equity and mileage limitations

disadvantages of purchasing a vehicle: large down payment and vehicle depreciation

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