#26 Derek borrows $308,808.00 to buy a house. He has a 30-year mortgage with a rate...

#26 Derek borrows $308,808.00 to buy a house. He has a 30-year mortgage with a rate of 5.42%. After making 132.00 payments, how much does he owe on the mortgage?

Expert Solution

Step 1: Find the monthly payment. We can use present value of annuity formula:

Where,
PVA = Present value of annuity
A = Annuity or payment
i = Interest rate in decimal form
a = Number of payments in a year
n = Number of payments (30*12 = 360)

Therefore, monthly payment = $1737.91

We can use the balance of loan formula to find the answer:

Where,
PV = Present value or original balance
A = Annuity or Monthly Payment
i = rate of interest
a = number of payments per year
n = number of payments done

Therefore, Derek owes $247,062.49 on the mortgage.

jeff jeffy answered 1 year ago

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