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5-58 Spreadsheet Problem When paying off a home mortgage, extra principle payments can have a dramatic...

5-58 Spreadsheet Problem When paying off a home mortgage, extra principle payments can have a dramatic impact on the time needed to pay off the mortgage.

  1. Create an amortization schedule for a $200,000, three-year mortgage, with a 6% APR.
  2. After the fifth year, add an extra $100 to each monthly payment. When is the loan paid off?

Solutions

Expert Solution

a:

Loan Amount Interest Rate Term in Years Monthly Payment
$200,000.00 6.00% 3 6084.39
Month StartingBalance Interest Principal EndingBalance TotalInterest
1 200000.00 1000.00 5084.39 194915.61 1000.00
2 194915.61 974.58 5109.81 189805.80 1974.58
3 189805.80 949.03 5135.36 184670.44 2923.61
4 184670.44 923.35 5161.04 179509.41 3846.96
5 179509.41 897.55 5186.84 174322.57 4744.51
6 174322.57 871.61 5212.77 169109.79 5616.12
7 169109.79 845.55 5238.84 163870.96 6461.67
8 163870.96 819.35 5265.03 158605.92 7281.02
9 158605.92 793.03 5291.36 153314.57 8074.05
10 153314.57 766.57 5317.81 147996.75 8840.63
11 147996.75 739.98 5344.40 142652.35 9580.61
12 142652.35 713.26 5371.13 137281.22 10293.87
13 137281.22 686.41 5397.98 131883.24 10980.28
14 131883.24 659.42 5424.97 126458.27 11639.69
15 126458.27 632.29 5452.10 121006.17 12271.98
16 121006.17 605.03 5479.36 115526.82 12877.02
17 115526.82 577.63 5506.75 110020.06 13454.65
18 110020.06 550.10 5534.29 104485.77 14004.75
19 104485.77 522.43 5561.96 98923.82 14527.18
20 98923.82 494.62 5589.77 93334.05 15021.80
21 93334.05 466.67 5617.72 87716.33 15488.47
22 87716.33 438.58 5645.81 82070.52 15927.05
23 82070.52 410.35 5674.03 76396.49 16337.40
24 76396.49 381.98 5702.41 70694.08 16719.38
25 70694.08 353.47 5730.92 64963.17 17072.86
26 64963.17 324.82 5759.57 59203.60 17397.67
27 59203.60 296.02 5788.37 53415.23 17693.69
28 53415.23 267.08 5817.31 47597.92 17960.77
29 47597.92 237.99 5846.40 41751.52 18198.75
30 41751.52 208.76 5875.63 35875.89 18407.51
31 35875.89 179.38 5905.01 29970.88 18586.89
32 29970.88 149.85 5934.53 24036.35 18736.75
33 24036.35 120.18 5964.21 18072.14 18856.93
34 18072.14 90.36 5994.03 12078.11 18947.29
35 12078.11 60.39 6024.00 6054.12 19007.68
36 6054.12 30.27 6054.12 0.00 19037.95

b: Since the mortgage period is 3 years, there can be no payments after 5th year and hence the mortgage is paid off in Year 3.

WORKINGS

jeff jeffy answered 1 year ago
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