Your home mortgage has an interest rate of 6% APR and requires monthly payments of $1,200 (ordinary annuity). The bank offers an opportunity to pay at the beginning of each month as an annuity due. Since the bank will receive the payments sooner, the payments will be smaller. The annuity due payment will be PMTDUE = PMTORD / (1 + r). How much will your payment be if you pay as at the beginning of each month?

Answer rating: 100% (QA)

To calculate the annuity due payment we can use the formula PMTDUE PMTORD 1 r Wh... View the full answer