Question

A young executive is going to purchase a vacation property for investment purposes. She needs to borrow $108,000.00 for 27 years at 4.6% compounded monthly, and will make monthly payments of $582.68. (Round all answers to 2 decimal places.) What is the unpaid balance after 12 months? $ During this time period, how much interest did she pay? $

Answer 1

Loan Amount = $108,000

Time Period = 27 years

Interest Rate = 4.60%

Monthly Payment = $582.68

After 12 months

Calculating Loan Balance,

Using TVM Calculation,

FV = [PV = 108,000, PMT = -582.68, T = 12, I = 0.046/12]

FV = $105,932.61

Loan Balance after 12 months = $105,932.61

Interest paid during this period = Total Amount paid - (Initial Loan Amount - Loan Balance)

Interest paid during this period = 12(582.68) - (108,000 - 105,932.61)

Interest paid during this period = $4,924.77