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Homework answers / question archive / Alesha is wondering what she will be owing on her mortgage at the end of the five year term
Alesha is wondering what she will be owing on her mortgage at the end of the five year term. She has a $488,000 mortgage with a semi-annual interest rate of 5.1%, amortized over 25 years. If she continues paying the same payment based on the 25 year amortization, what will she owe at the end of the five year term?
| PVOrdinary Annuity = C*[(1-(1+i/(f*100))^(-n*f))/(i/(f*100))] |
| C = Cash flow per period |
| i = interest rate |
| n = number of payments I f = frequency of payment |
| 488000= Cash Flow*((1-(1+ 5.1/1200)^(-25*12))/(5.1/1200)) |
| Cash Flow = 2881.3 |
| Using Calculator: press buttons "2ND"+"FV" then assign |
| PV =-488000 |
| I/Y =5.1/12 |
| N =25*12 |
| FV = 0 |
| CPT PMT |
| Using Excel |
| =PMT(rate,nper,pv,fv,type) |
| =PMT(5.1/(12*100),12*25,,488000,) |
| PVOrdinary Annuity = C*[(1-(1+i/(f*100))^(-n*f))/(i/(f*100))] |
| C = Cash flow per period |
| i = interest rate |
| n = number of payments I f = frequency of payment |
| PV= 2881.3*((1-(1+ 5.1/1200)^(-20*12))/(5.1/1200)) |
| PV = 432957.59 |
| Using Calculator: press buttons "2ND"+"FV" then assign |
| PMT =2881.3 |
| I/Y =5.1/12 |
| N =20*12 |
| FV = 0 |
| CPT PV |
| Using Excel |
| =PV(rate,nper,pmt,FV,type) |
| =PV(5.1/(12*100),12*20,,PV,) |
