Question

Assumed that a fund can pay dividend steadily for the coming 10 years, which will generate an equivalent return of 5% annually, and the bank charge is negligible.

Peter is thinking of investing $10,000 at the end of each month in this fund for the purpose of using it for the down payment of purchasing a real property in the future.

Ten years later, Peter gets married. Although the fund value has increased a lot and became sufficient for him to pay for the down payment of purchasing a residential property, they still have to borrow $5,000,000 from a bank. They select a 20 years mortgage plan at 3% annual interest rate.

What is the amount of their monthly instalment? (Use 4 decimal places of the interest rate factor to do the calculation.)

Answer 1

Create the Amortization table in an excel as shown below :

Amount of monthly instalment = $ 27,729.88

Drag the months to row count 240 for all the columns from 'Months' to 'Closing'. See the end part of the sheet below: