Question

Please use excel functions

6. What is the payment in month 234 on a 30-year loan for $925,000 at 4.85% that requires no payments during the first five years and fully amortizing payments for the remaining years of the loan? Answer Loan Amount Years Periods Per Year Interest Rate Balance at EOM 60 Total Amortization Years 7 What is the balloon nayment du at maturity for a 10-year loan for $325 000 at 5 9507 if

Answer 1

For the first 5 years, no payments are made, but interest is accumulated and added to the outstanding principal balance.

Outstanding principal balance at end of year 5 = beginning loan amount * (1 + (interest rate / 12))^{number of years * 12}

Outstanding principal balance at end of year 5 = $925,000 * (1 + (4.85% / 12))^{5 * 12}

Outstanding principal balance at end of year 5 = $1,178,272.90

The outstanding principal balance after 5 years is amortized over the remaining 25 years of the loan.

Monthly payment is calculated using PMT function in Excel :

rate = 4.85% / 12   (converting annual rate into monthly rate)

nper = 25*12 (25 year remaining loan term with 12 monthly payments each year)

pv = 1178272.90 (outstanding principal balance after 5 years)

PMT is calculated to be $6,785.49

A2 - X for =PMT(4.85%/12,25*12,A1) А B C D E F 1 $ 1,178,272.90 ($6,785.49)! ($6