Question

The Taylors have purchased a $200,000 house. They made an
initial down payment of $30,000 and secured a mortgage with
interest charged at the rate of 7%/year on the unpaid balance.
Interest computations are made at the end of each month. If the
loan is to be amortized over 30 years, what monthly payment will
the Taylors be required to make? (Round your answer to the nearest
cent.)

$

What is their equity (disregarding appreciation) after 5 years?
After 10 years? After 20 years? (Round your answers to the nearest
cent.)

5 years | $ |

10 years | $ |

20 years | $ |

Answer #1

Calculating Monthly Payment,

Using TVM Calculation,

PMT = [PV = 170,000, FV = 0, N = 360, I = 0.07/12]

PMT = $1,131.01

Monthly Payment = $1,131.01

Calculating Loan Balance after 5 years,

Using TVM Calculation,

FV = [PV = 170,000, PMT = -1,131.01, N = 60, I = 0.07]

FV = $160,024.01

Equity = 200,000 - 160,024.01 = $39,975.99

Calculating Loan Balance after 10 years,

Using TVM Calculation,

FV = [PV = 170,000, PMT = -1,131.01, N = 120, I = 0.07]

FV = $145,881.79

Equity = 200,000 - 145,881.79 = $54,118.21

Calculating Loan Balance after 20 years,

Using TVM Calculation,

FV = [PV = 170,000, PMT = -1,131.01, N = 240, I = 0.07]

FV = $97,412.34

Equity = 200,000 - 97,412.34 = $102,587.66

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