Homework Answers
Loan Balance after t payments = [Loan Amount * {(1 + r)^n - (1 + r)^t}] / [(1 + r)^n - 1]
Loan Balance after 12 payments = [$600,000 * {(1 + 0.12/12)^(15*12) - (1 + 0.12/12)^12}] / [(1 + 0.12/12)^(15*12) - 1]
= [$600,000 * {5.9958 - 1.1268}] / [5.9958 - 1]
= [$600,000 * 4.8690] / 4.9958
= $2,921,386.17 / 4.9958
= $584,768.21
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Intro You just took out a 15-year traditional fixed-rate mortgage for $600,000 to buy a house....
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