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You have found the first home that you want to purchase for $180,000. You met...

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Finance

  1. You have found the first home that you want to purchase for $180,000. You met with your local bank and you got approved for a mortgage with the following terms: Interest is fixed at a rate of 4% p.a.; payments need to be made on a monthly basis, with the first payment due one month after the purchase is finalized; the bank requires you to make fixed and equal payments for each of the 60 months, after which the mortgage is fully paid off; the bank is willing to finance 80% of your purchase.

Answer the following questions and please clearly indicate which answers relate to which question. Please type down your step-by-step calculation to get partial credits. If you use formulas or excel functions, please indicate which formulas or functions you are using and what are your inputs.

1. What is the dollar amount the bank is willing to finance?

2. What is the monthly payment for this mortgage?

3. What is the total amount of dollars of interest you are paying over the entire 5-year period?

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