Question 4

1. Evelyn Mansah is applying to her friendly, neighbourhood bank for a mortgage of $200,000. The bank is quoting 6%. She would like to have a 25-year amortization period and wants to make payments monthly. What will Evelyns payments be? Prepare an amortization schedule for five years of the loan.
2. Suppose you want to buy a new computer system and the store is willing to allow you to make monthly payments. The entire computer system costs $3500. The loan period is for 2 years and the interest rate is 16.9% with monthly compounding. What is your monthly payment?
3. Suppose you want to earn an effective rate of 16% and you are looking at an account that compounds on a monthly basis. What APR must they pay?
4. You are looking at two savings accounts. One pays 7.35%, with daily compounding. The other pays 7.4% with semiannual compounding. Which account should you use?