Question

Calculate the total interest paid in year 7 for the following real estate loan... 20 years...

Calculate the total interest paid in year 7 for the following real estate loan...

20 years

4.00% interest rate

$4470000 purchase price

80% loan to value

Homework Answers

Answer #1

Purchase price = 4,470,000

Loan value = 0.8*4,470,000 = 3,576,000

Interest rate = 4%

Time = 20 years

Annual Installment to be paid = PMT(rate,nper,pv) in excel = PMT(0.04,40,3576000) = 263,128.34

The amortization table is as shown below to calculate the interest in 7th year:

Year Payment Interest Principal Outstanding
0 $ 35,76,000.00
1 $ 2,63,128.34 $ 1,43,040.00 $ 1,20,088.34 $ 34,55,911.66
2 $ 2,63,128.34 $ 1,38,236.47 $ 1,24,891.87 $ 33,31,019.79
3 $ 2,63,128.34 $ 1,33,240.79 $ 1,29,887.55 $ 32,01,132.24
4 $ 2,63,128.34 $ 1,28,045.29 $ 1,35,083.05 $ 30,66,049.19
5 $ 2,63,128.34 $ 1,22,641.97 $ 1,40,486.37 $ 29,25,562.82
6 $ 2,63,128.34 $ 1,17,022.51 $ 1,46,105.83 $ 27,79,456.99
7 $ 2,63,128.34 $ 1,11,178.28 $ 1,51,950.06 $ 26,27,506.93

As per the table, the total interest paid in the 7th year = $111,178.28

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