Ian and Chloe (a couple) wish to purchase a new home. The price is $320,000 and they plan to pay a down payment of $50,000. Citibank will lend them the remainder at 12% p.a. compounded monthly for 20 years. The first payment is due one month from today. a. What is the amount of their monthly payment?

b. Suppose 6 years have passed since Ian and Chloe enter the original loan. How much do they still owe the bank? c. ETH, a long-term rival lender, offers to refinance their loan at fixed rate of 9% p.a. (compounded monthly). Cost associated with this refinancing is $3,500. Should they refinance?

Please write down the complete formula