2. A mortgage has the following terms: Amount: $750,000 Rate: 6.25% Amortization (Years): 30 Term (Years): 20 Please determine the following: A. What is the Monthly Payment? B. In preparing an Income Statement, what is the Interest Expense for years 1-5? C What is the Principal Balance at the end of year 6?
2. A mortgage has the following terms: Amount: $750,000 Rate: 6.25% Amortization (Years): 30 Term (Years): 20 Please determine the following: A. What is the Monthly Payment? B. In preparing an Income Statement, what is the Interest Expense for years 1-5? C What is the Principal Balance at the end of year 6?
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
Related questions
Question
Transcribed Image Text:Calculation of monthly payment is as follows:
A
B
1 Loan Amount
2 Number of years
3 Rate
7,50,000.00
30
6.25%
4 Monthly payment
5 Formula
3 52,660.83
ЕРMТ[В3, В2,-В1,1)
Step 3 Calculation of interest
expense for years 1-5
Calculation of interest expense for years 1-5 is
as follows:
A
H
Loan Amount
Number ol years
7.50.000.00
30
ate
4.25%
4
Monthly peyment
PMTIRA/12.82. BL.O
Formula
Years
Monthily payment imerest Pormula for mterest
Prncipal
rermula for prmepal
Lean salance
$7.50,000.00
T1.200.25 PMT|01/12.A.02.-01o) 21.102.01=PPMT(D/1249.02-DL.O $7.26.317.17 =Ga-D
$7,03,554.10 G9 E10
$6,80,149.56 -G10 E1
$6,5,523.12 -aL1-E2
S63294.15 -612-E13
$6,0.200.01 G13-14
27..00
3,78561PMT(83/12.A10,82-81,00 23,283 27810-CI9
3,664 34-PMT|83/12.A11,82-81,,00 23,40454-811-C1
10
2
11
3 27.068.8
12
t27,066.
13
3419.91-PMT(RI/12.A132,-81.,0) 21,64IL-813-CI3
2 27,0. z2,7.74 =PMIT|R2/12,A14R2,-81,.0) 221,772. 14R14-CI4
14
15
16 terest expese for years 1-5
17
Formula
SUMICOC
Step 4 Calculation of principal
balance at the year end 6
Calculation of principal balance at the year-
end 6 is as follows:
Loan Amount
2
Number of years
30
Rate
6.25%
Moly payment
Formula
4
PUTB/12,02-B1,0)
6
Monthly paymen Interest rarmula for ntarest
Prnapal romula for prinapal
Loan Balanc
Tears
5750.000.00
6 1,06 25 -IPMI1/12,AS,2. 1,0 21.162.6 -POMIna/12A2, n.0 S72517.17 -GE
57.01.154.10 -0s-1o
1.
27,06
10
S T1,64MIPMTO/12,01102-BL 0 z 2104.5 -311-C
1,542AS -IPMIJa/12,A12,12, HL S26.44-1212
11
127,06.
12
S455.423.12 l-G11 12
13
27.00
54.32.374.15 G12-13
14
1,256.74IPMT0/12,414,02-BL0) t3.7a.34 -314-C14
15
16 Lon belance at the end of year$
6,09.202.01
Transcribed Image Text:2. A mortgage has the following terms:
Amount:
$750,000
Rate:
6.25%
Amortization (Years):
30
Term (Years):
20
Please determine the following:
A. What is the Monthly Payment?
B. In preparing an Income Statement, what is the Interest Expense for years
1-5?
c. What is the Principal Balance at the end of year 6?
D. What is the value of the loan at the expiration?
E. If rates remain constant (flat), what would the benefit be to refinance
this loan after year 10?
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