Question

For a mortgage loan of $300,000, at 2.0 percent interest for 15 years and 12 monthly payments per year, find the balance at the end of 4 years and 10 years.

Answer 1

Mortgage loan (PV) = $300,000

No. of monthly payments to be made (N) = 180 {15 years x 12months}

Monthly Interest rate (i) = 2%/12 = 0.1667% per month

Monthly payment (PMT) = ?

Using financial calculator or PMT function in excel,

Monthly payment (PMT) = $1930.53

At the end of 4 years 10 months,

No of monthly installments pending (N) = 122

Monthly Interest rate (i) = 2%/12 = 0.1667% per month

Monthly payment (PMT) = $1930.53

Balance at the end of 4years 10 months (PV) =?

Using financial calculator of PV function in excel,

Balance at the end of 4years 10 months (PV) = $212,962.91