Question

Jenn has a mortgage of 200 000$ that she repays over 20 years with payments at the end of each month at a nominal rate of 12% convertible monthly. After 10 years, she pays an amount of principal that reduces her monthly payments to 2000$ from the 11th year on. What amount did she pay back at time 10 on top of her normal monthly payment ?

Answer 1

USING FINANCIAL CALCULATOR

Step 1: Present value of reduced monthly payments
I/Y=12%/12
N=12*10
PMT=-2000
FV=0
CPT PV=139401.044062795

Step 2: Monthly payments
N=12*20
I/Y=12%/12
PV=-200000
FV=0
CPT PMT=2202.17226713922

Step 3: Loan oustanding after 10 years
I/Y=12%/12
N=12*10
PMT=
PV=-200000
CPT FV=153492.556622669

Step 4: Payment made
=153492.556622669-139401.044062795
=14091.51256

USING EXCEL

=FV(12%/12,12*10,PMT(12%/12,12*20,-200000),-200000)-PV(12%/12,12*10,-2000)
=14091.51