Question

When you purchased your​ house, you took out a​ 30-year annual-payment mortgage with an interest rate of 10% per year. The annual payment on the mortgage is $14,909. You have just made a payment and have now decided to pay the mortgage off by repaying the outstanding balance.

a. What is the payoff amount if you have lived in the house for 18 years​ (so there are 12 years left on the​ mortgage)?

b. What is the payoff amount if you have lived in the house for 19 years​ (so there are 11 years left on the mortgage)?

c. What is the payoff amount if you have lived in the house for 18 years​ (so there are 12 years left on the mortgage) and you decide to pay off the mortgage immediately before the 18th payment is​ due?

(If you could show me how to solve in Excel that would help. I am struggling with how to set up the spreadsheet to solve this equation.)

Answer 1

Formulas will be as follows:

NOTE : Problem c can be solved by two methods

(in case of any further explanation please comment)