Question

I just need help with the last two answers. I am not sure why they were counted as incorrect? Thanks.

Five years ago, Diane secured a bank loan of $380,000 to help finance the purchase of a loft in the San Francisco Bay area. The term of the mortgage was 30 years, and the interest rate was 9% per year compounded monthly on the unpaid balance. Because the interest rate for a conventional 30-year home mortgage has now dropped to 6% per year compounded monthly, Diane is thinking of refinancing her property. (Round your answers to the nearest cent.) (a) What is Diane's current monthly mortgage payment? $ 3057.57 (b) What is Diane's current outstanding balance? $ 364344.52 (c) If Diane decides to refinance her property by securing a 30-year home mortgage loan in the amount of the current outstanding principal at the prevailing interest rate of 6% per year compounded monthly, what will be her monthly mortgage payment? Use the rounded outstanding balance. $ 2347.48 x (d) How much less would Diane's monthly mortgage payment be if she refinances? Use the rounded values from parts (a)-(c). $ 710.09 X

Answer 1

c)
Rate = 6%/12
Nper = 30*12 = 360
PV = -364344.52
FV = 0
Monthly payment can be calculated by using the following excel formula:
=PMT(rate,nper,pv,fv)
=PMT(6%/12,30*12,-364344.52,0)
= $2184.43

Monthly payment = $2184.43

d)
Reduction in monthly payment = $3057.57 - $2184.43 = $873.14