Kevin takes out a home loan for $150,000. Payments are made at the end of every month for 30 years. The annual effective interest rate is 9%. At the end of the 10th year, just after the payment is made, Kevin pays an additional $10,000 in principle. The size of the future level payment doesn't change, but the loan will be paid off early. The last payment will be smaller than the level payment amount. a) Calculate the outstanding loan balance just after the additional $10,000 in principle is paid. b) Calculate the size and amount of the last payment. c) Calculate the total interest paid on the loan over the full time period.

Kevin takes out a home loan for $150,000. Payments are made at the end of every month for 30 years. The annual effective interest rate is 9%. At the end of the 10th year, just after the payment is made, Kevin pays an additional $10,000 in principle. The size of the future level payment doesn't change, but the loan will be paid off early. The last payment will be smaller than the level payment amount. a) Calculate the outstanding loan balance just after the additional $10,000 in principle is paid. b) Calculate the size and amount of the last payment. c) Calculate the total interest paid on the loan over the full time period.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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