Suppose Mary borrows $3,500,000 from a local bank to buy the apartment. The bank offers a...
Suppose Mary borrows $3,500,000 from a local bank to buy the apartment. The bank offers a 30 years, P - 2% mortgage. The prime rate is fixed at 5% currently. Calculate the monthly mortgage installment amount.
Homework Answers
The bank mortgage rate is P-2%. If the prime rate is 5%, then mortgage rate = 5% - 2% = 3%.
Monthly loan payment is calculated using PMT function in Excel :
rate = 3% / 12 (converting annual rate into monthly rate)
nper = 30*12 (30 year loan with 12 monthly payments each year)
pv = 3500000 (loan amount)
PMT is calculated to be $14,756.14
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