MORTGAGE PAYMENTS. You are trying to determine the amount of the mortgage payments that you would make if you purchased a new home. The home you like requires a 25-year, $85,000 mortgage at an interest rate of 9% compounded monthly (.75% per month). The present value of an annuity of $1 for 300 periods at

.75% is 119.1616.

REQUIRED:

1. Prepare the cash flow diagram for the mortgage. .

2. What would be the amount of your monthly payments (rounded to the nearest dollar)?

3. By how much would you reduce the balance due on the mortgage in the first month?