Changing the payment frequency Suppose that you are buying a house and re- LO 3 quire a $200,000 mortgage. You have told the bank that you want to repay your mortgage over 30 years. The bank has indicated that, whatever payment option you consider, you will be charged an effective annual interest rate of 7% on your mortgage.

REQUIRED What will be your mortgage payment if you are required to make:

(a) Mortgage payments once a year.

(b) Mortgage payments semiannually.

(c) Mortgage payments quarterly.

(d) Mortgage payments monthly.

(e) Mortgage payments weekly.

(f) Explain any relationship that you see in your responses to parts

(a) through (e).

(LO 1)