Question

1. Determine the monthly payment for the following mortgages of $90,000 each.

Mortgage	Interest Rate (%)	Maturity (In Months)	Payment
A	10	360
B	11	300
C	9	300
D	8	260

Professor gave us the answers, I just need to see the work

a.

$789.81

b.

$882.10

c.

$775.27

d.

729.67

Answer 1

a)

Rate = 10% / 12 = 0.83333%

Present value = Monthly payments * [1 - 1 / (1 + r)ⁿ] / r

90,000 = Monthly payments * [1 - 1 / (1 + 0.0083333)³⁶⁰] / 0.0083333

90,000 = Monthly payments * [1 - 0.05041] / 0.0083333

90,000 = Monthly payments * 113.951256

Monthly payments = $789.81

Keys to use in a financial calculator:

2nd I/Y 12

PV 90000

I/Y 10

N 360

CPT PMT

b)

Rate = 11% / 12 = 0.9167%

Present value = Monthly payments * [1 - 1 / (1 + r)ⁿ] / r

90,000 = Monthly payments * [1 - 1 / (1 + 0.009167)³⁰⁰] / 0.009167

90,000 = Monthly payments * [1 - 0.064727] / 0.009167

90,000 = Monthly payments * 102.026033

Monthly payments = $882.10

Keys to use in a financial calculator:

2nd I/Y 12

PV 90000

I/Y 11

N 300

CPT PMT

c)

Rate = 9% / 12 = 0.75%

Present value = Monthly payments * [1 - 1 / (1 + r)ⁿ] / r

90,000 = Monthly payments * [1 - 1 / (1 + 0.0075)³⁰⁰] / 0.0075

90,000 = Monthly payments * [1 - 0.106288] / 0.0075

90,000 = Monthly payments * 119.161622

Monthly payments = $755.27

Keys to use in a financial calculator:

2nd I/Y 12

PV 90000

I/Y 9

N 300

CPT PMT

Note: Please check this option again. It should be $755.27 as per the variables given.

d)

Rate = 8% / 12 = 0.6667%

Present value = Monthly payments * [1 - 1 / (1 + r)ⁿ] / r

90,000 = Monthly payments * [1 - 1 / (1 + 0.006667)²⁶⁰] / 0.006667

90,000 = Monthly payments * [1 - 0.177698] / 0.006667

90,000 = Monthly payments * 123.339064

Monthly payments = $729.67

Keys to use in a financial calculator:

2nd I/Y 12

PV 90000

I/Y 8

N 260

CPT PMT

Note: After each calculation, always clear time value money effect by pressing 2nd CLR TVM.

Note: If you need more clarifications, please put it in comments