Question

Please include how to input into finance calculator.

1) Derek borrows $267,226.00 to buy a house. He has a 30-year mortgage with a rate of 4.72%. (A) What is the monthly mortgage payment? (B) how much does he owe on the mortgage after making 89.00 payments?

2) If he borrows $35,341.00 to buy a car. He will make monthly payments for 6 years. The car loan has an interest rate of 5.52%. After a 15.00 months Derek decides to pay off his car loan. How much must he give the bank?

Answer 1

1) Principal = 267226

Annual Interest Rate = 4.72%

30 Year Mortgage, 12 payments per Year, Total= 30×12= 360

Using the formulae PMT in Excel =PMT( Rate/12, 360, -Principal, 0,0)= 1389.15

1389.15 is the monthly Mortgage Payment

Using the PPMT Function for the principal part of the payment =PPMT ( RATE/12, Period Number,360, - Principal, 0,0)

Period Number is the payment period number for example first monthly payment is 1 period number, Second Monthly payment is 2 Period number and so on.

Using the IPMT Function for the Interest part of the payment =IPMT(Rate/12, Period Number,360, -Principal, 0,0)

By using all these Function in Excel you will get an Amortization Schedule in Excel for 360 Payments

With the help of the Amortization Schedule, we can get the Principal Balance left after the 89 Schedule Payments, Which is 231283.77 $

2) For the Second Question we will use the same methodology that we have already used for the first question

So with the help of the Amortization Schedule, we can say the Balance after 15 Months that Derek has to pay the bank is 28909.03 $