A 25-year mortgage requires payments of $3,712.70 at the end of each three months. If interest is2% compounded monthly,a) what was the mortgage principal? $b) what would be the amount of interest charged? $

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A 25-year mortgage requires payments of $3,712.70 at the end of each three months 2% compounded monthly, a) what was the mortgage principal? $ b) what would be the amount of interest charged? $

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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Concept explainers

Cost of Credit

The cost of credit is an extra amount that the borrower has to pay besides the loan amount. These credit charges may vary from loan to loan. The cost of credit includes interest charges, maintenance charges, and arrangement charges. Some of the costs are mandatorily collected by the lender based on the loan amount and tenure of the loan. The cost of credit is also called finance charges of the credit.

Question

A 25-year mortgage requires payments of $3,712.70 at the end of each three months. If interest is
2% compounded monthly,
a) what was the mortgage principal? $
b) what would be the amount of interest charged? $

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