A family buys a house for which they assume a mortgage of $200,000. The annual mortgage...
A family buys a house for which they assume a mortgage of $200,000. The annual mortgage rate is 9% and is compounded monthly. The loan amortization period is 15 years and the mortgage payments will be made at the end of each month
- What is the monthly mortgage payment?
- What will be the outstanding loan amount at the end of five years?
- What is the total interest that will be paid over the amortization period?
Homework Answers
rate positively ..
| Ans a) | we have to use financial calculator to solve this | |||
| put in calculator | ||||
| FV | 0 | |||
| PV | -200000 | |||
| I | 9%/12 | 0.75% | ||
| N | 15*12 | 180 | ||
| Compute PMT | $2,028.53 | |||
| ans b) | ||||
| FV | -200000 | |||
| PMT | $2,028.53 | |||
| I | 0.75% | |||
| N | 5*12 | 60 | ||
| Compute PV | $160,135.84 | |||
| Ans = | $160,135.84 | |||
| ans c) | Total interest paid = | |||
| 2028.53*180-200000 | $165,135.97 | |||
| Ans = | $165,135.97 | |||
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