You decide to buy a home for $100,000. You approach two banks for financing. Bank 1 requires a 10 percent down payment and requires monthly payments on a 20-year mortgage sufficient to earn it an effective annual return of 12 percent. Bank 2 also needs a 10 percent down payment and also has a 20-year mortgage but quotes a 12 percent annual rate, which is compounded monthly. 

What are the monthly payments on the respective mortgages?

Answer rating: 100% (QA)

To calculate the monthly payments on the mortgages from Bank 1 and Bank 2 we need to consider the lo... View the full answer