Question

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

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