Question

QUESTION 1: Several years ago, Bill Smith borrowed $125,000 to buy his house. He has a 15 year, monthly payment mortgage with an interest rate of 8.75 percent per annum. Bill is thinking about refinancing his house so he would like to know the payoff on his current loan. Assuming that he just made payment number 106 , compute the payoff on Bill's loan. (Round your answer to 2 decimal places; record your answer without commas and without a dollar sign).

QUESTION 2:

I plan to deposit $ 358 into my retirement every year for the next 25 years. The first deposit will be made today (that is, at t = 0) and the last deposit will be made at the end of year 24 (that is, at t = 24). I plan to make no other deposits. Assuming that I will earn 11.90 % p.a. on my retirement funds, how much money will I have accumulated 36 years from today (that is, at t = 36)? (Round your answer to 2 decimal places; record your answer without commas and without a dollar sign).

Answer 1

Solution 1
	Total Loan Amount ( P)	125000
	Time period ( n)	15	years
	Time period ( in months )	180	months
	Rate of Interest ( i)	8.75%	pa
	Total Payout at the end of 15 years ( A)
	A = P ( 1 + i )^n
Amount=	125000*(1+.0875/12)^180
Amount=	462,225
Total Loan Paid till payment no 106
Amount=	125000*(1+.0875/12)^106
Amount=	270,001.12
Balance payoff required is =		462224.97-270001.12
		192223.85
Solution 2
Yearly retirement deposit		358 for 25 years
Time period		36 years
End of Year	Principal Amount	Interest @ 11.90%	Cumulative value @ 11.90 %
1	358	42.602	400.60
2	358		848.88
3	358		1,350.49
4	358		1,911.80
5	358		2,539.91
6	358		3,242.76
7	358		4,029.25
8	358		4,909.34
9	358		5,894.15
10	358		6,996.16
11	358		8,229.30
12	358		9,609.19
13	358		11,153.28
14	358		12,881.13
15	358		14,814.58
16	358		16,978.12
17	358		19,399.12
18	358		22,108.22
19	358		25,139.70
20	358		28,531.92
21	358		32,327.82
22	358		36,575.44
23	358		41,328.51
24	358		46,647.21
25	358		52,598.83
26			58,858.09
27			65,862.20
28			73,699.81
29			82,470.08
30			92,284.02
31			103,265.82
32			115,554.45
33			129,305.43
34			144,692.78
35			161,911.22
36			181,178.66