Answer to Question #296465 in Financial Math for Kenn

Question

Daniel is a successful businessman. Recently, he purchased a bungalow house. He purchased 

the house at a price of 1.23 million. He paid 10% of the price of the house as a down payment. 

He borrowed from a bank to settle the balance. He agreed to pay the loan by making monthly 

instalments for 30 years at the rate of 2.98% compounded monthly.

(a)

Find the down payment amount and loan amount. Hence, calculate the monthly 

payment for the loan.

(b)

What will be the total interest paid by Daniel?

(c)

What will be the total amount paid by Daniel for the house?

(d)

If Daniel missed the first two monthly payments, how much has he to pay the third 

payment to settle all outstanding arrears?

(e)

Find the effective rate which is equivalent to the above to the above nominal rate.