Question

Today is January 1, 2020 (T=0). You take out a 30 year fully amortizing mortgage of $400,000. Payments are made at the end of each calendar month. The loan has a fixed annual rate of 4.0% (or 4.0%/12 per month). How payments will you have to make until you have at least $300,000 of equity in your home? a. 32 b. 33 c. 109 d. 110 e. 111

Answer 1

The answer is 223 payments.

1 Monthly payments = $1,909.66 3 No. of Payments = payments (in cell B3) = $ Goal Seek ? X BA Set cell: To value: 300000 By changing cell: $B$31 OK Cancel


B $1,909.66 А 1 Monthly payments = 2 3 No. of Payments = payments (in cell B3) = 222.8532711 $ 3,00,000.00 Goal Seek Status ? x Step Goal Seeking with Cell B4 found a solution. Target value: 300000 Current value: $3,00,000.00 Pause OK | Cancel


A 1 Monthly payments = --PMT(4%/12,12*30,400000,,0) 3 No. of Payments = 222.853271086505 Equity in home after 4 payments (in cell B3) = =PV(4%/12,B3,-B1,,0)

All the given options are incorrect.