Problem: John Gunho wants to purchase a condominium, he will be taking out a mortgage for the condo. The purchase price for the condo is $42,000 at an annual rate of 7.2%. He reviewed his options for the term, and he knows the effects of compounding interest, so he plans to take a one year term mortgage.
(1) Create an amortization schedule for the entire term of the loan (12 months).
(2) How much interest did he pay for the term of the loan?
(3) Most mortgages are compounded monthly. Using the compounded formula determine the future value of the loan and the interest paid.
(4) Is there a discrepancy between (2) and (3)? Use complete sentences to explain the discrepancies or lack of discrepancies? Hint: What does the Compounded formula not consider?
(5) Attach this instruction to your work.