3. Suppose you are taking out a mortgage for $300,000, with an annual rate of interest of six percent. Mortgage payments are made and interest is compounded monthly. (A) What is the monthly mortgage...

Extracted text: 3. Suppose you are taking out a mortgage for $300,000, with an annual rate of interest of six percent. Mortgage payments are made and interest is compounded monthly. (A) What is the monthly mortgage payment for a 20-year mortgage? Hint: if you've forgotten how to do this, write down an equation that $300,000 equals the present value of the sum of 240 monthly payments. Let X be the monthly payment, and let r be the effective monthly interest rate. Then multiply the equation you have by 1/1+r to get another equation that you can subtract from the first one to simplify. (B) What part of the first monthly payment is repayment of principal?