There is a relationship between mortgage amount, number of payments, amount of each payment, how often each payment is made, and the interest rate. The following formula illustrates the relationship: PV= R[1-(1+i)"] i • PV = present value ⚫ i = interest rate per compounding period, as a decimal R = payment amount • n = number of payments Suppose a bank offers you a 3.4% interest rate, compounded semi-annually, on a mortgage amount of $173 112. You pay $1000/mo, or $6000 semi-annually. How long, in years, would it take to pay off the mortgage? a. 80 years b. 60 years c. 20 years od. 40 years e. 10 years A X

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