Homework Help: infinite math

Posted by tommy on Sunday, April 1, 2012 at 8:29pm.

Hey guys! really need help with this one!!!

On December 31, 1995, a house is purchased with the buyer taking out a 30-year $90,000 mortgage at 9% interest compounded monthly. The mortgage payments are made at the end of each month. Calculate:

(A) the unpaid balance of the loan on December 31,2005, just after the 120th payment.

(B) the interest that will be paid during January 2006.

Thanks in advance!

infinite math - Reiny, Sunday, April 1, 2012 at 8:48pm
first you need the monthly payment

PV = 90000
i = .09/12 = .0075
n = 12x30 = 360

90000 = Payment [ 1 - 1.0075^-360]/.0075
payment = 724.16

balance right after 120th payment
= 90000(1.0075)^120 - 724.16( 1.0075^120 - 1)/.0075
= 80486.77

interest on next month = 80486.77(.0075) = 603.65

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