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# ADMS3530-Midterm-W06-Sol - Name Section ID(Prof Kohens...

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Page 2 PV of a growing annuity = + + × t r g g r C 1 1 1 = + + × 20 10 . 0 1 03 . 0 1 1 03 . 0 10 . 0 10000 = = \$104,504.72 2. (Q.10 in B) You are planning to buy a new condominium in Toronto. The Condo is worth \$220,000; you will put a 25% down payment and obtain a 25-year fixed rate mortgage at 6.25% (APR semi-annually compounded) for the rest. Assuming that monthly payments begin in one month, how much interest will you pay (in dollars) over the life of the loan? 1. Find the monthly rate: i = (1+ 0.0625/2) 2/12 -1 = 0.005142, 2. Find the monthly payment with a PV of \$165,000 ( \$220,000 x 75% ) PV= -165,000 , N=300, i=0.5142%, FV=0, PMT=? Answer= \$1,080.35
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