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You are interested in buying a house that costs $300,000. You plan to make a 20% down payment and borrow 80% of the purchase price. You will issue a mortgage loan (yes, the borrower is the issuer of the mortgage loan) to the bank who is lending you the money. The term of the mortgage loan is 15 years. The interest rate is fixed at 5% per year. Lets assume yearly rather than monthly payments for this problem set. Keep in mind that your mortgage loan will be fully amortized (paid off) after the end of fifteen years. What are your total pretax monthly mortgage payments: Here are the Excel terms that you will need to calculate your pre-tax mortgage payments: rate: 5% nper:15 pv: $240,000 fv: 0 type: 0 $17,890.10 $23,122.15 $5,868.05 $22,345.16 $17254.10

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Answer #1

We need to use the funtion PMT

Rate 5%
NPER 15
PV -240000
fv 0
type 0

Excel Funtion =PMT(5%,15,-240000,0,0)

Pretax Mortage Payment=$23122.15

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