Question

On January 1 of Year 1, Connor borrowed $400,000 under a mortgage note payable contract. The annual interest rate on this mortgage is 10% compounded monthly. This is a 15-year, fully-amortizing monthly mortgage. The monthly payments are $4,298.42 and are due at the end of each month, starting on January 31. On January 31 of Year 1, Connor paid an extra $5,000 on the mortgage, so the total payment on that date was $9,298.42. Connor made the regular $4,298.42 payment on February 28 of Year 1.

What is the remaining balance of the mortgage note payable as of February 28 of Year 1 after the monthly payment is made on that date? Note: the February 28 payment is the second monthly payment.

Group of answer choices

$393,020.11

$392,345.44

$395,433.45

$394,034.91

$390,904.73

Answer 1

Beginning balance of mortgage	$ 4,00,000.00
Add:
Monthly interest	$       3,333.33
($400000*10%/12)
Less;
Total payment made in Januray year 1	$       9,298.42
Balance At beginning of Feb year 1	$ 3,94,034.91
Add:
Monthly interest	$       3,283.62
($394034.90*10%/12)
Less:
Monthly Payment	$       4,298.42
Balance as on Feb 28, year 1	$ 3,93,020.11
Correct Answer: FIRST