Question
Wanda takes out a 33-year mortgage for 160000 dollars at an interest rate of 7.8 percent effective. To repay the loan, she agrees to make
Wanda takes out a 33-year mortgage for 160000 dollars at an interest rate of 7.8 percent effective. To repay the loan, she agrees to make equal monthly payments, the first coming in one month. However, after making the 10th payment, she decides to refinance the mortgage. In particular, she decides to make 95 more monthly payments (each of the same amount as before), and then she'll pay off the remainder of the loan with a large lump payment immediately after the last of these 95 payments. To save money for this large final payment, she plans to make equal monthly deposits into an account paying 5.1 percent convertible monthly. These deposits will occur at the same time as the monthly loan payments, i.e. the first deposit will be one month after she refinances the loan, and the last will be at the time of the final loan payment. (So there are a total of 95 deposits.) What will be the amount of each of the monthly deposits?
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