Question
In: Finance
Horace and Myrtle want to buy a house. Their banker offered them a fully amortizing $95,000...
Horace and Myrtle want to buy a house. Their banker offered them a fully amortizing $95,000 loan at a 12% annual rate for 30 years. What will their monthly payment be if they make equal monthly installments over the next 30 years. (show calculation) Now, what is their loan balance at the end of year 4?
Solutions
Expert Solution
Information provided:
Present value= $95,000
Time= 30 years*12= 360 months
Interest rate= 12%/12= 1%
1.The monthly payment is computed by entering the below in a financial calculator:
PV= -95,000
I/Y= 1
N= 360
Press the CPT key and PMT to compute the monthly payment.
The value obtained is 977.18.
Therefore, the monthly payment is $977.18.
2.4 years*12= 48 months
Loan balance at the end of year 4= $95,000 - $977.18*48
= $95,000 - $46,904.73
= $48,095.27.
In case of any query, kindly comment on the solution.
jeff jeffy answered 7 months agoRelated Solutions
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