Question

Sarah secured a bank loan of $195,000 for the purchase of a house. The mortgage is to be amortized through monthly payments for a term of 15 years, with an interest rate of 3%/year compounded monthly on the unpaid balance. She plans to sell her house in 5 years. How much will Sarah still owe on her house at that time? (Round your answer to the nearest cent.) $

Answer 1

PVOrdinary Annuity = C*[(1-(1+i/100)^(-n))/(i/100)]

C = Cash flow per period

i = interest rate

n = number of payments

195000= Cash Flow*((1-(1+ 3/1200)^(-15*12))/(3/1200))

Cash Flow = 1346.63 = installment

PVOrdinary Annuity = C*[(1-(1+i/100)^(-n))/(i/100)]

C = Cash flow per period

i = interest rate

n = number of payments

PV= 1346.6342*((1-(1+ 3/1200)^(-10*12))/(3/1200))

PV = 139459.8 = amount left after 5 years