Answered: You take out a 35-year mortgage loan…

Biochemistry

9th Edition

ISBN:9781319114671

Author:Lubert Stryer, Jeremy M. Berg, John L. Tymoczko, Gregory J. Gatto Jr.

Publisher:Lubert Stryer, Jeremy M. Berg, John L. Tymoczko, Gregory J. Gatto Jr.

Chapter1: Biochemistry: An Evolving Science

Section: Chapter Questions

Problem 1P

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Question

You take out a 35-year mortgage loan for $634000. The annual interest rate of the loan that you pay is 3.4%, and you make monthly payments. In addition to the required monthly payment, you decide to add an extra $410 to your payment to pay the loan off early. After how many payments will the loan be paid off completely? (Note: the last payment you make may not be for the normal amount you would pay, but it still counts as a payment.)

Expert Solution

Step 1

To calculate the number of payments required to pay off a loan, you need to use the formula:

n = -(log(1 - (r * P / A)) / log(1 + r))

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