3. A borrower has a 30-year mortgage loan for $200,000 with an interest rate of 5%...

3. A borrower has a 30-year mortgage loan for $200,000 with an interest rate of 5% and monthly payments. If she wants to pay off the loan after 8 years, what would be the outstanding balance on the loan?

(A) $84,886

(B) $91,246

(D) $175,545

Solutions

Expert Solution

EMI = Loan amount / PVAF (r%, n)

where r is int rate per month and n is no. of months

= $ 200,000 / PVAF (0.4167%, 360)

= $ 200,000 / 186.2816

= 1073.64

Loan Amortization:

I have broken the excel sheet into 3 pictures as I couldn't able to take one pic

Thus after 96 months ( 8 years) closing balance in Loan amortization is $ 171,706

jeff jeffy answered 1 month ago

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