Question

Mortgage Analysis Part I You are planning to purchase a house that costs $480,000. You plan to put 20% down and borrow the remainder. Based on your credit score, you believe that you will pay 3.99% on a 30-year mortgage. 1. Use function "PMT" to calculate your mortgage payment. 2. Calculate the total cost of the home purchase. (Down payment plus principle (loan amount) plus interest.) 3. Calculate how much interest you will pay in total? 4. Assume that you plan to pay an extra $300 per month on top of your mortgage payment, calculate how long it will take you to pay off the loan given the higher payment (Use interest rate of 3.99%). Calculate how much interest you will pay in total? Compare this to the value that you calculated for #3.

Answer 1

1	Mortgage payment	$1,831.06
2	Total cost	$755,182.18
3	Total interest	$275,182.18
4	Time to repay the loan in months	275.39
	Total interest	383182.18

Workings

AutoSave o 9.3HD Book1 - Excel Sign in - 0 X File Home Insert Draw Page Layout Formulas Data Review View Help Tell me what you want to do Share Comments - 11 A = = 0 insert E 47 0 Calibri BIU - B -A A = E Paste L- - General 3$ -% to Number Conditional Format as Formatting Table - . Delete - Format Cell Styles Sort & Find & Filter - Select Editing Clipboard Font Alignment Styles Cells B1 - x fc Loan amount Loan amount Rate Term in years |=480000*80% 0.0399 30 5 1 Mortgage payment =PMT(3.99%/12,30*12,-C1) Total cost 480000*20%+5*360 9 3 Total interest =C5*360-C1 11 4 Time to repay the loan in months =NPER(3.99%/12,C5+300,-C1) Total interest = (C5+300)*360-C1 Sheet1 Sheet2 Sheet3 Ready E D -- ENG 11:54 PM + 100% 0 2 I