A borrower has a 30-year mortgage loan for $200,000 with an interest rate of 6% APR compounded monthly and level monthly payments. At the end of year 10, she unexpectedly won a lottery and received an after-tax cash of $10,000. She used that cash to pay down the principal of her mortgage loan and will keep paying the same monthly payment till she pays off the mortgage loan. How many more months will she has to pay

A borrower has a 30-year mortgage loan for $200,000 with an interest rate of 6% APR compounded monthly and level monthly payments. At the end of year 10, she unexpectedly won a lottery and received an after-tax cash of $10,000. She used that cash to pay down the principal of her mortgage loan and will keep paying the same monthly payment till she pays off the mortgage loan. How many more months will she has to pay

EBK CFIN

6th Edition

ISBN:9781337671743

Author:BESLEY

Publisher:BESLEY

Chapter4: Time Value Of Money

Section: Chapter Questions

Problem 25PROB

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Concept explainers

Cost of Credit

The cost of credit is an extra amount that the borrower has to pay besides the loan amount. These credit charges may vary from loan to loan. The cost of credit includes interest charges, maintenance charges, and arrangement charges. Some of the costs are mandatorily collected by the lender based on the loan amount and tenure of the loan. The cost of credit is also called finance charges of the credit.

Question

A borrower has a 30-year mortgage loan for $200,000 with an interest rate of 6% APR compounded monthly and level monthly payments.

At the end of year 10, she unexpectedly won a lottery and received an after-tax cash of $10,000. She used that cash to pay down the principal of her mortgage loan and will keep paying the same monthly payment till she pays off the mortgage loan. How many more months will she has to pay

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