Question

Derek borrows $290,341.00 to buy a house. He has a 30 year mortgage with a rate of 4.09%. After making 86 payments, how much does he owe on the mortgage?

Answer 1

Calculation of monthly payments:

PV = $290,341
Nper = 30 * 12 = 360
Rate = 4.09% / 12
FV = 0

Monthly payment can be calculated by using the following excel formula:
=PMT(rate,nper,pv,fv)
=PMT(4.09%/12,360,-290341,0)
= $1,401.24

Calculation of amount he owe on the mortgage after 86 payments:

Rate = 4.09% / 12
Nper = 360 - 86 = 274
PMT = 1401.24
FV = 0

PV can be calculated by using the following excel formula:
=PV(rate,nper,pmt,fv)
=PV(4.09%,274,-1401.24,0)
= $249,283.93

The amount he owe on the mortgage after 86 payments = $249,283.93