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Five years ago, Diane secured a mortgage of $ 1,300,000 to help finance the purchase of a house in Arima. The term of the mortgage was 25 years and the interest rate was 6% per year compounded monthly.

 

(a) What is Diane’s current monthly mortgage payment?

 (b) What is Diane’s current outstanding balance?

 Oct 31, 2021

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(a) - N=25*12; R=0.06/12;PV=1,300,000; PMT=PV*R*((1 + R)^N) / ((1 + R)^(N) - 1)

 

MORTGAGE PMT =$8,375.92 - monthly

 

(b) - FV=0; P=8375.92; R=0.06/12; N=60; PV=1,300,000; FV= -(-P* (R + 1)^N + R* PV *(R + 1)^N + P)/R

 

Balance after 5 years or 60 monthly payments==$1,169,117.13

 Oct 31, 2021

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