Question

Problem 4 and 5-8 House Appreciation and Mortgage Payments Say that you purchase a house for $216,000 by getting a mortgage for $190,000 and paying a down payment of $26,000. If you get a 20-year mortgage with an interest rate of 8 percent, what are the monthly payments? (Round your final answer to 2 decimal places.) Payment What would the loan balance be in five years? (Use a payment value rounded to 2 decimal places. Round your final answer to 2 decimal places.) Loan balance If the house appreciates at 2 percent per year, what will be the value of the house in five years? (Round your final answer to 2 decimal places.) Future value

Answer 1

A B C D E F G 1 2 a) 3 Rate 4 Nper 5 PV 6 FV 8%/12 20*12 190000 240 7 8 Monthly payment can be calculated by using the following excel formula: 9 =PMT(rate,nper,pv,fv) 10 EPMT(8%/12,240,-190000,0) 11 1589.24 12 Monthly payment = $1,589.24 13 b) 14 Nper 5*12 = 60 15 PMT 1,589.24 16 PV 190000 17 rate 8%/12 18 19 =FV(8%/12,60,1589.24,-190000) 20 166298.33 21 Loan balance = $1,66,298.33 22 23 ) 24 Value of the house after 5 years = FV = PV*(1+r)^n 25 =216,000*(1+0.02)^5 26 = 216,000 * 1.1041 27 2,38,481.45