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John has a level-payment mortgage loan with 12 years remaining, at an interest rate of 7%...

John has a level-payment mortgage loan with 12 years remaining, at an interest rate of 7% with a payment of $1,000/monthly. John's mortgage balance is:

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Expert Solution

We are required to calculate the present value of annuity.

Given information

Annuity payment

         1,000.00

Interest rate

7%

Compounding frequency --> monthly

12

Rate per compounding period -->(Interest rate / compounding frequency)

0.58%

No. of years

                     12

No. of compounding periods --> (no. of years x compounding frequency)

                  144

PV annuity factor ---> Formula -->

(1-(1+monthly interest rate)^-no. of compounding frequency) / monthly interest rate

               97.24

PV of annuity (Monthly annuity payment x PV annuity factor)

       97,240.22

Hope this helps you answer the question. Please provide the feedback and rating for the answer

Thanks

jeff jeffy answered 2 years ago
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