Question

Suppose you decide to borrow $180,000 for the house and you think you can pay $1,000 at the end of every month. The bank charges 3% APR. Approximately, how long should your mortgage be (in years)? Briefly show your calculations.

Answer 1

Ans 20 years

P =	Regular Payments
PV =	Loan Amount
r =	rate of interest
n =	no of periods
P =	r (PV)
	1 - (1 + r )-n
1000 =	(3%/12)*180000
	1 - (1 / (1 + 3%/12)^n))
1000 =	450
	1 - (1 / (1 + 3%/12)^n))
n =	239 months
	or
n =	20 years