Question

1.Gary and Ann have just purchased a new home. They paid $40,000 as a down payment and obtained a
$200,000 mortgage to pay for the rest. The 30-year mortgage has an interest rate of 0.5% per month. How
much will they pay each month in principal and interest? Your answer must be correct to the nearest
penny.
2. Jerry and Katrina took out a 30-year, $360,000 mortgage on their 2800-square-foot house. The mortgage
rate is 0.4% per month so their payments are $1888.80 per month. How much would they still owe on
their mortgage immediately after making their 220th monthly payment?

Answer 1

Solution 1:

Down payment : $40,000

Loan Amount: $200,000

Term: 30 Years

Rate of Interest : 0.5% per month.

To calculate the amount of installment to be paid every month can be calculated as follows:

Step:1: In Microsoft Excel, click on the “FORMULAS” tab at the top
Step 2: Select the option “Financial”
Step 3: Under Financial option select the option “PMT”
Step 4: Type Rate = 0.005,     Nper = 360      PV= -200000 and press Enter

The monthly installment will be $1199.10

Solution 2:

Loan Amount: $360,000

Term: 30 Years

Rate of Interest : 0.4% per month.

After the 220^th monthly installment, they owe $202,173.12 to the Bank.