You plan to take a 15-year mortgage in the amount of $400,000 to buy a home. The bank charges 4% annual interest compounded monthly. You are going to pay off this loan by fixed installments (fixed total payment) to be made at the end of each month for fifteen years. Find the principal repayment and interest payment for month 1.
You plan to take a 15-year mortgage in the amount of $400,000 to buy a home. The bank charges 4% annual interest compounded monthly. You are going to pay off this loan by fixed installments (fixed total payment) to be made at the end of each month for fifteen years. Find the principal repayment and interest payment for month 1.
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
You plan to take a 15-year mortgage in the amount of $400,000 to buy a home. The bank charges 4% annual interest compounded monthly. You are going to pay off this loan by fixed installments (fixed total payment) to be made at the end of each month for fifteen years. Find the principal repayment and interest payment for month 1.
|
Month |
BEG bal |
Total PMT |
Principal |
Interest |
|
1 |
400,000.00 |
2,958.75 |
??? |
??? |
| a. |
$1625.42; $1333.33 |
|
| b. |
$1313.76; $1333.33 |
|
| c. |
$1313.76; $3208.33 |
|
| d. |
$1625.42; $3208.33 |
Expert Solution
Step 1
Given,
Mortgage amount is $400,000
Rate is 4%
term is 15 years
Step by step
Solved in 2 steps
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, finance and related others by exploring similar questions and additional content below.Recommended textbooks for you
Essentials Of Investments
Finance
ISBN:
9781260013924
Author:
Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:
Mcgraw-hill Education,
Essentials Of Investments
Finance
ISBN:
9781260013924
Author:
Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:
Mcgraw-hill Education,
Foundations Of Finance
Finance
ISBN:
9780134897264
Author:
KEOWN, Arthur J., Martin, John D., PETTY, J. William
Publisher:
Pearson,
Fundamentals of Financial Management (MindTap Cou…
Finance
ISBN:
9781337395250
Author:
Eugene F. Brigham, Joel F. Houston
Publisher:
Cengage Learning
Corporate Finance (The Mcgraw-hill/Irwin Series i…
Finance
ISBN:
9780077861759
Author:
Stephen A. Ross Franco Modigliani Professor of Financial Economics Professor, Randolph W Westerfield Robert R. Dockson Deans Chair in Bus. Admin., Jeffrey Jaffe, Bradford D Jordan Professor
Publisher:
McGraw-Hill Education