Question
In: Accounting
A $425,000 mortgage with a 3-year term is amortized over 25 years at an interest rate...
A $425,000 mortgage with a 3-year term is amortized over 25 years at an interest rate of 8.2% compounded semi-annually. If payments are made at the end of each month, determine the mortgage balance at the end of the 3-year term.
Solutions
Expert Solution
First of all we need to understand mortgage term and Amortization term.
Mortgage term is the period during which person need to pay to the agreeing term .
but amortisation term is the period at the end of which balance dur amount will be zero.
| EMI = | (principal* intt rate*(1+r)^n)/(1+r)^n-1 | ||||||
| Principal | 425000 | ||||||
| N | 50 semi annually | ||||||
| r | 4.1% semi annually | ||||||
| power of 1.041 | value | ||||||
| 2 | 1.083681 | EMI | (425000*0.041*7.46)/(7.46-1) | ||||
| 3 | 1.128112 | 20122.37 | |||||
| 4 | 1.174365 | ||||||
| 5 | 1.222513 | Half Year | EMI | Interest | Principal | O/S balance | |
| 6 | 1.272637 | 0 | 425000 | ||||
| 7 | 1.324815 | 1 | 20122.37 | 17425 | 2697.37 | 422302.63 | |
| 8 | 1.379132 | 2 | 20122.37 | 17314.41 | 2807.96 | 419494.67 | |
| 9 | 1.435676 | 3 | 20122.37 | 17199.28 | 2923.09 | 416571.58 | |
| 10 | 1.494539 | 4 | 20122.37 | 17079.43 | 3042.94 | 413528.64 | |
| 11 | 1.555815 | 5 | 20122.37 | 16954.67 | 3167.70 | 410360.95 | |
| 12 | 1.619604 | 6 | 20122.37 | 16824.8 | 3297.57 | 407063.38 | |
| 13 | 1.686007 | ||||||
| 14 | 1.755134 | Balance after 3 year would be = 407063.38$ | |||||
| 15 | 1.827094 | ||||||
| 16 | 1.902005 | ||||||
| 17 | 1.979987 | ||||||
| 18 | 2.061167 | ||||||
| 19 | 2.145675 | ||||||
| 20 | 2.233647 | ||||||
| 21 | 2.325227 | ||||||
| 22 | 2.420561 | ||||||
| 23 | 2.519804 | ||||||
| 24 | 2.623116 | ||||||
| 25 | 2.730664 | ||||||
| 26 | 2.842621 | ||||||
| 27 | 2.959169 | ||||||
| 28 | 3.080494 | ||||||
| 29 | 3.206795 | ||||||
| 30 | 3.338273 | ||||||
| 31 | 3.475142 | ||||||
| 32 | 3.617623 | ||||||
| 33 | 3.765946 | ||||||
| 34 | 3.92035 | ||||||
| 35 | 4.081084 | ||||||
| 36 | 4.248408 | ||||||
| 37 | 4.422593 | ||||||
| 38 | 4.60392 | ||||||
| 39 | 4.79268 | ||||||
| 40 | 4.98918 | ||||||
| 41 | 5.193736 | ||||||
| 42 | 5.40668 | ||||||
| 43 | 5.628354 | ||||||
| 44 | 5.859116 | ||||||
| 45 | 6.09934 | ||||||
| 46 | 6.349413 | ||||||
| 47 | 6.609739 | ||||||
| 48 | 6.880738 | ||||||
| 49 | 7.162848 |
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