Hills Griffin
02/03/2024 · Primary School
A \( \$ 160,000 \) mortgage is to be repaid over a 20-year period by end of the month payments rounded up to the next-higher \( \$ 100 \) Interest is \( 5.44 \% \) compounded semi-annually. (a) Determine the number of rounded payments required to repay the mortgage. (b) Determine the size of the last payment. (c) Calculate the amount of interest saved by rounding the payments up to the next-higher \( \$ 100 \).
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To repay a \$160,000 mortgage over 20 years with a 5.44% semi-annual interest rate, the number of payments required is calculated using the mortgage formula. The monthly payment is determined based on the principal and interest rate. The last payment is the remaining balance after all previous payments. The interest saved by rounding payments up to the next \$100 is calculated by comparing the total interest paid with the interest that would have been paid without rounding.
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