Question

PLEASE SHOW FORMULA USED(NOT FROM EXCEL) AND STEPS USING FINANCIAL CALC

7. Ann obtains a fully amortizing 30 year Fixed Rate Mortgage with monthly payments for $135,000 at 5.25%. What will be Ann’s mortgage balance after 20 years of payments (ie after 240 months)?

8. Ann obtains a fully amortizing 30 year Fixed Rate Mortgage with monthly payments for $135,000 at 5.25%. What percent of Ann’s 20^th payment goes to interest?

9. Ann obtains a fully amortizing 30 year Fixed Rate Mortgage with monthly payments for $135,000 at 5.25%. What percent of Ann’s 20^th payment goes to principal?

Answer 1

Using financial calculator, we set the below:

1.

PMT=135000

N=12*30=360

I/Y=5.25%/12

FV=0

CPT PV=24447500

Loan remaining after 19 years:

PMT=-135000

N=12*19=228

I/Y=5.25%/12

PV=24447500

CPT FV=1315202.51

Hence, in 240th payment,

interest=1315202.51*5.25%/12=5754.010981

principal paid=135000-5754.010981=129245.9

hence, percentage torwards interest=5754.010981/135000=4.26%

percentage towards principal=129245.9/135000=95.74%

mortgage balance after 20 years=1315202.51-129245.9=1185956.61