1. You are considering buying a two-bedroom apartment for $800,000. You plan to make a $200,000 down payment and take a $600,000 30-year mortgage for the rest. The interest rate on the mortgage is 6% monthly APR. Payments are due at the end of every month.

(a) What is the effective annual rate?

(b) What is the monthly payment?

C) Suppose that exactly five years have passed, interest rates are now 5% and you decided to re-finance your mortgage. You have to pay the remaining portion of the principal on the mortgage to the bank. Exactly how much do you owe to the bank at that point?

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