Question

1. You have just purchased land in Washington for $700,000. You have been charged an interest rate of 9% APR, compounded monthly, and have entered into a 30-year mortgage with the bank. What are your monthly payments?

2. What are the second month's principal payment and ending balance?

Show work!

Answer 1

Ans 1) $ 5632.36

Ans 2) $ 424.60 and $ 688735.28

	P =	Regular Payments
	PV =	Loan Amount
	r =	rate of interest
	n =	no of periods
	P =	r (PV)
		1 - (1 + r )^-n
	P =	(9%/12)*700000
		1 - (1 / (1 + 9%/12)^360))
	P =	5250
		0.932113993
	P =	5632.36
	Beginning Balance	Interest	Principal	Ending Balance
1	700000.00	5250.00	382.36	694367.64
2	694367.64	5207.76	424.60	688735.28
	Principal in Second Payment	424.60
	Ending Balance after Second Payment	688735.28