Question

Derek borrows $339,527.00 to buy a house. He has a 30-year mortgage with a rate of 4.99%. After making 133.00 payments, how much does he owe on the mortgage? Answer round to 2 decimal places.

Answer 1

Amount borrowed = $339527

term of loan = 30 years

interest rate = 4.99%

So, monthly payments can be calculated on financial calculator using following values:

PV = -339527

N = 30*12 = 360

FV = 0

I/Y = 4.99/12 = 0.4158

compute for PMT, we get PMT = 1820.58

So, monthly payment on loan = $1820.58

After 133 payments, remaining payments = 360 - 133 = 227

So, now, PV of the remaining annuity is the remaining balance.

PV can be calculated using following values on financial calculator:

FV = 0

PMT = 1820.58

N = 227

I/Y = 4.99/12 = 0.4158

compute for PV, we get PV = -267131.21

So, Derek owe $267131.21 on mortgage.