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You are in the market for a home. You saved up $150,000 for a down payment that will go towards your home purchase. You meet

You are in the market for a home. You saved up $150,000 for a down payment that will go towards your home purchase. You meet with the bank and the bank offers you a $750,000, 25-year mortgage loan. Monthly payments will be $4,022.81 at the beginning of the month.

  1. What nominal interest rate, compounded quarterly, does the bank charge you?
  2. For your 50th mortgage payment, what is the principal repayment portion of this payment?
  3. Suppose you win the lottery in exactly 12 years after you open your mortgage. You would like to pay back the mortgage loan in a lump-sum payment. How much will you need to repay in 12 years time, assuming there are no penalty fees? [Hint: what's the outstanding balance in 12 years?]

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