Question

9. How long would it take to pay off the following mortgages? (Hint. Never is a...

9. How long would it take to pay off the following mortgages? (Hint. Never is a possible answer.)

Mortgage

Payment ($)

Coupon rate (%)

Initial Loan ($)

Maturity

A

400

10

45000

B

800

10.5

75000

C

600

11

62000

D

550

11

60000

The correct answers are:

a.

334 months

b.

197 months

c.

322 months

d.

Never

I just need to see the work

Homework Answers

Answer #1

Mortgage A

use excel function to find number of months

=NPER(rate,pmt,pv,fv)

=NPER(10%/12,400,-45000,0)

=334 months

Mortgage B

use excel function to find number of months

=NPER(rate,pmt,pv,fv)

=NPER(10.5%/12,800,-75000,0)

=197 months

Mortgage C

use excel function to find number of months

=NPER(rate,pmt,pv,fv)

=NPER(11%/12,600,-62000,0)

=322 months

Mortgage D

use excel function to find number of months

=NPER(rate,pmt,pv,fv)

=NPER(11%/12,550,-60000,0)

=NA,so answer is never

the above are answers

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