Suppose that you borrow $175,000 to purchase a home. The loan is a standard mortgage that will be repaid over the course of 30 years with equal monthly payments. The annual interest rate on the loan is 4.8%, giving monthly payments of &918.16
A. How much interest is due on the first payment? How must interest is due on the second payment?
B. What will the unpaid loan balance be after 20 years of payments?
C. If you can afford monthly payments of $1200, then how much could you have borrowed under the same loan terms (same interest rate and repayment period)?
D. Suppose that you can only afford monthly payments of $850 on the mortgage. What annual interest rate would the loan have to carry (with the same repayment term) so that you could afford the payments? Give the percentage accurate to two decimal places.