Homework Answers
PV of Loan =500000
PMT =2998
Number of Periods =30*12 =360
Rate per month = 6%/12 =0.5%
New PMT due to 10% increase = 2998*(1+10%) =3297.80
Using financial calculator
I/Y =0.5%; PMT=3297.80; PV = -500000 CPT N
N= 284.5395 months
Number of years =284.5395/12 = 23.71 years
The number of years has decreased because the principal part of
payment in the PMT has increased . Hence the total principal is
prepaid in 23.71 years.
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