Question

Derek borrows $256,452.00 to buy a house. He has a 30-year mortgage with a rate of 4.58%. The monthly mortgage payment is $________.

Derek borrows $283,432.00 to buy a house. He has a 30-year mortgage with a rate of 4.68%. After making 87.00 payments, how much does he owe on the mortgage?

A bank offers 6.00% on savings accounts. What is the effective annual rate if interest is compounded quarterly?

Answer 1

a)	Monthly Payment		=pmt(rate,nper,pv)			Where,
			= $ 1,311.62			rate	=	4.58%/12	=	0.003816667
						nper	=	30*12	=	360
						pv			=	$ -2,56,452.00
b)	After 87 payments, mortgage owed		=-pv(rate,nper,pmt)			Where,
			= $ 2,46,104.92			rate	0.00390
						nper	273
						pmt	$         1,466.58
	Working:
	pmt	=pmt(rate,nper,pv)			Where,
		= $ 1,466.58			rate	=	0.00390
					nper	=	360
					pv	=	$ -2,83,432.00
	Loan amount is the present value of future cash flows.
c)	Effective annual rate	=	((1+(i/n))^n)-1		Where,
		=	((1+(0.06/4))^4)-1		i	=	6%
		=	6.14%		n	=	4