Homework SourseCreate AS for a 250000 M to be repaid in equal monthly payme
Create AS for a $250,000 M to be repaid in equal monthly payments at the end of each month for the next 15 years. AIR=5% compounded monthly.
AS= amortization schedule, M=mortgage, AIR = annual interest rate
b. How large must each MP be if the loan is for $350,000? IR stays at 5% and that the loan is paid off over 15 years.
MP=monthly payment, IR = interest rate
c. How large must each payment be if the loan is for $350,000, the interest rate is 5%, and the loan is paid off in equal monthly payments at the end of each month for the next 30 years? This loan is for the same amount as the loan in part b, but the payments are spread out over twice as many periods. Why are these payments not half of the payments on the loan in part (b)?
Solution
The Monthly payment would be $ 1975.94 for 180 months
| 1) | Mortgage Loan | $250,000 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| No of payments(15*12) | 180 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Monthly Interest Rate | 0.416666667 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| We can use the PMT function in excel to find out the monthly payment for the mortgage loan | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| PMT(0.416%,180,250000) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| ($1,975.94) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| The Monthly payment would be $ 1975.94 for 180 months
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