Question

Based on Exhibit 7-7, what would be the monthly mortgage payments for each of the following situations? (Round your answers to 2 decimal places.)

a. A 164,500, 20-year loan at 6 percent

b. A 219,500 25 year loan 6.5 percent

c. A 199,000, 30-year loan at 6.5 percent

Answer 1

a.Information provided:

Present value= $164,500

Time= 20 years*12= 240 months

Interest rate= 6%/12= 0.50% per month

The monthly payment is calculated by entering the below in a financial calculator:

PV= -164,500

N= 240

I/Y= 0.50

Press the CPT key and PMT to compute the monthly payment.

The value obtained is 1,178.53.

Therefore, the monthly payment is $1,178.53.

b.Information provided:

Present value= $219,500

Time= 25 years*12= 300 months

Interest rate= 6.50%/12= 0.5417% per month

The monthly payment is calculated by entering the below in a financial calculator:

PV= -219,500

N= 300

I/Y= 0.5417

Press the CPT key and PMT to compute the monthly payment.

The value obtained is 1,482.08.

Therefore, the monthly payment is $1,482.08.

c.Information provided:

Present value= $199,000

Time= 30 years*12= 360 months

Interest rate= 6.50%/12= 0.5417% per month

The monthly payment is calculated by entering the below in a financial calculator:

PV= -199,000

N= 360

I/Y= 0.5417

Press the CPT key and PMT to compute the monthly payment.

The value obtained is 1,257.82.

Therefore, the monthly payment is $1,257.82.

In case of any query, kindly comment on the solution.