Question

Jane plans to buy a house in 10 years. The house she dreams about costs about $150,000 today. The cost of houses increases at 2.5% per year. Jane will accumulate $100793.72 from her investment of 75,000 in 10 years. In addition, Jane needs to borrow $91218.96 additional money to purchase her house in 10 years.

a) Prepare an amortization table to pay off Jane’s mortgage, if she can borrow at an annual rate of 6.5% to pay off the mortgage quarterly in 5 years after buying the house.

Please show every step and explanation.

Answer 1

Ans:

Please find below the amortisation table, All working is attached in excel sheet with formulas.

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Amortisation table
Quarter	Opening Principal amount	Interest	Installment	Closing outstanding balance
1	$          91,218.96	$1,482.31	5378.81	$              87,322.46
2	$          87,322.46	$1,418.99	5378.81	$              83,362.64
3	$          83,362.64	$1,354.64	5378.81	$              79,338.47
4	$          79,338.47	$1,289.25	5378.81	$              75,248.91
5	$          75,248.91	$1,222.79	5378.81	$              71,092.90
6	$          71,092.90	$1,155.26	5378.81	$              66,869.35
7	$          66,869.35	$1,086.63	5378.81	$              62,577.16
8	$          62,577.16	$1,016.88	5378.81	$              58,215.23
9	$          58,215.23	$    946.00	5378.81	$              53,782.42
10	$          53,782.42	$    873.96	5378.81	$              49,277.57
11	$          49,277.57	$    800.76	5378.81	$              44,699.52
12	$          44,699.52	$    726.37	5378.81	$              40,047.08
13	$          40,047.08	$    650.77	5378.81	$              35,319.04
14	$          35,319.04	$    573.93	5378.81	$              30,514.16
15	$          30,514.16	$    495.86	5378.81	$              25,631.21
16	$          25,631.21	$    416.51	5378.81	$              20,668.90
17	$          20,668.90	$    335.87	5378.81	$              15,625.96
18	$          15,625.96	$    253.92	5378.81	$              10,501.07
19	$          10,501.07	$    170.64	5378.81	$                5,292.91
20	$            5,292.91	$      86.01	5378.81	$                        0.11