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Homework answers / question archive / A $100,000 mortgage has a 25-year amortization period and a 3-year interest rate term
A $100,000 mortgage has a 25-year amortization period and a 3-year interest rate term. Calculate the monthly payment at 8% compounded semiannually.
Answer
So, Monthly Payment is of $3,141.02
Explanation
Computation of Monthly Payment using PMT Function in Excel:
=pmt(rate,nper,-pv,fv)
Here,
PMT = Monthly Payment = ?
Rate = (1+8%/2)^2 - 1 = 0.0816/12 = 0.0068 compounded monthly
Nper = 3 years*12 months = 36 months
PV = $100,000
FV = 0
Substituting the values in formula:
=pmt(0.0068,36,-100000,0)
PMT or Monthly Payment = $3,141.02
