Question

Assume you’ve recently purchased a home for $129,000 and you will be making monthly payments on the mortgage. If the mortgage is for 30 years at an interest rate of 5%, what will be the monthly payment? For the first monthly payment, how much will go towards interest payment and how much will go towards repayment of the principal? Show your work.

Answer #1

P = | Regular Payments | |||

PV = | Loan Amount | |||

r = | rate of interest | |||

n = | no of periods | |||

P = | r (PV) | |||

1 - (1 +
r )^{-n} |
||||

P = | (5%/12)*129000 | |||

1 - (1 / (1 + 5%/12)^360)) | ||||

P = | 537.5 | |||

0.776173404 | ||||

P = | 692.50 | |||

Beginning Balance | Interest | Principal | Ending Balance | |

1 | $129,000.00 | $537.50 | $155.00 | $128,845.00 |

For the first monthly payment, interest payment = $ 537.50 | ||||

repayment of the principal = $ 155 |

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