posted by tammy l on .
You have just graduated from college and landed your first big job. You have always dreamed of being a homeowner, and after carefully shopping for your dream home, you find one that you would like to purchase at a cost of $250,000. After researching banks to find the best interest rate, you find that Banks for Homeowners offers the best rate of 6% interest that compounds monthly for 30 years.
•What is the monthly payment for this loan?
•What is the unpaid balance of the loan at the end of 5 years?
•What is the unpaid balance at the end of the 10th year?
Pt = (Po*r*t) / (1 - (1 + r)^-t).
Pt = Loan amount after 30 years.
Po = Amount of loan = $250,000.
r = (6% / 12) / 100 = 0.005 = Int. rate
per month expressed as a decimal.
t=lenth of loan = 30 yrs. = 360 months.
Pt = 450000 / (1-0.16604) = $539,595.47
= Amount of loan after 30 yrs.
539595.47 / 360mo = $1498.88 = monthly
The process of calculating the balance
before the maturity date is called Amortizing and cannot be shown here
because of the length of the table involved.
I can share this INFO with you:
5-Yr. Bal: $232,691.84
Payed off 56% of a 30 year mortgage in 5years....