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Compare the offers from these two banks for your mortgage

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Reference no: EM133008268

Question - You intend to purchase a house which is currently valued at $500,000. Your plan is to pay 20% down in cash and finance the balance with a mortgage for 30 years.

Growth Bank offers you a lending rate of 2.5%, compounding monthly

Big Bank offers you a lending interest rate of 2.48%, compounding weekly.

Required -

a. Compare the offers from these two banks for your mortgage by calculating Effective Annual Interest Rate (EAR). Which bank will you choose for your mortgage?

b. If you chose Growth Bank what would be your monthly mortgage payment?

c. You decided to set aside $300 in an investment at the beginning of each week for 6 months to save money for buying new furniture. If the interest rate of the investment is 3.5%, how much money can you save at the end of six months?

Reference no: EM133008268

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