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Sarah secured a bank loan of $155,000 for the purchase of a house. The mortgage is to be amortized through monthly payments for a term of 15 years, with an interest rate of 3%/year compounded monthly on the unpaid balance. She plans to sell her house in 5 years. How much will Sarah still owe on her house? (Round your answer to the nearest cent.)

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Anonymous

  1. Direct application of your main formulas ...
    i = .03/12 = .0025

    First you need the monthly payment, p
    155000 = p(1 - 1.0025^-180)/.0025
    p = ....

    amount owing
    = 155000(1.0025)^60 - p(1.0025^60 - 1)/.0025
    = ...

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    Reiny

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