an apartment complex is valued at $3 million. a hedge fund is looking to buy the

Question

an apartment complex is valued at $3 million. a hedge fund is looking to buy the property with a $500,000 down payment and a 10 year loan with an annual rate of interest 3.5%. calculate the monthly payments. after making the monthly payments for 3 years, the fund decides to lay an extra $1,000 a month in order to payoff the loan early, how many months will it take to pay off the loan early? how much does the fund save by doing this? an apartment complex is valued at $3 million. a hedge fund is looking to buy the property with a $500,000 down payment and a 10 year loan with an annual rate of interest 3.5%. calculate the monthly payments. after making the monthly payments for 3 years, the fund decides to lay an extra $1,000 a month in order to payoff the loan early, how many months will it take to pay off the loan early? how much does the fund save by doing this? an apartment complex is valued at $3 million. a hedge fund is looking to buy the property with a $500,000 down payment and a 10 year loan with an annual rate of interest 3.5%. calculate the monthly payments. after making the monthly payments for 3 years, the fund decides to lay an extra $1,000 a month in order to payoff the loan early, how many months will it take to pay off the loan early? how much does the fund save by doing this?

Explanation / Answer

after 3 years, Loan amount left for payment = $1839416.431

Now, Addition $1000 payment is done.

So, new monthly installment = 24721.51+1000 = $25721.51

1839416.431 = 25721.51*(1-1/1.0029167^N)/.0029167

here N = No. of new month for payment of loan

by trial and error method

N = 80.35 month approx

Savings = - 80.35*25721.51 + 84*24721.51 = $9883.51

Value of Apartment = $ 3million Amount of Down payment = $500000 (.5 Million) Amount of loan required = $2.5 Million Annual Rate of interest = 3.5% So, monthly interest rate (R) = 3.5%/12 = .29167 % Term of loan = 10 years No. of months (n) = 120 Here, we will apply present value of annuity formula to calculate the monthly payments 2.5 million = monthly payment*( 1 - 1/(1+R)^n) / R 2.5 million = monthly payment*( 1 - 1/1.0029167^120)/.0029167 Monthly payment = 2500000/101.1265 Monthly payments = 24721.51 R = 0.29% Loan = 2500000 Month Monthly payment Interest Principal Loan amount left 1 24721.51 7291.75 17429.76 2482570.24 2 24721.51 7240.913 17480.6 2465089.643 3 24721.51 7189.927 17531.58 2447558.06 4 24721.51 7138.793 17582.72 2429975.342 5 24721.51 7087.509 17634 2412341.341 6 24721.51 7036.076 17685.43 2394655.907 7 24721.51 6984.493 17737.02 2376918.89 8 24721.51 6932.759 17788.75 2359130.139 9 24721.51 6880.875 17840.64 2341289.504 10 24721.51 6828.839 17892.67 2323396.833 11 24721.51 6776.652 17944.86 2305451.975 12 24721.51 6724.312 17997.2 2287454.777 13 24721.51 6671.819 18049.69 2269405.086 14 24721.51 6619.174 18102.34 2251302.75 15 24721.51 6566.375 18155.14 2233147.615 16 24721.51 6513.422 18208.09 2214939.526 17 24721.51 6460.314 18261.2 2196678.33 18 24721.51 6407.052 18314.46 2178363.872 19 24721.51 6353.634 18367.88 2159995.996 20 24721.51 6300.06 18421.45 2141574.546 21 24721.51 6246.33 18475.18 2123099.367 22 24721.51 6192.444 18529.07 2104570.301 23 24721.51 6138.4 18583.11 2085987.191 24 24721.51 6084.199 18637.31 2067349.88 25 24721.51 6029.839 18691.67 2048658.209 26 24721.51 5975.321 18746.19 2029912.021 27 24721.51 5920.644 18800.87 2011111.155 28 24721.51 5865.808 18855.7 1992255.453 29 24721.51 5810.811 18910.7 1973344.754 30 24721.51 5755.655 18965.86 1954378.899 31 24721.51 5700.337 19021.17 1935357.726 32 24721.51 5644.858 19076.65 1916281.074 33 24721.51 5589.217 19132.29 1897148.781 34 24721.51 5533.414 19188.1 1877960.685 35 24721.51 5477.448 19244.06 1858716.623 36 24721.51 5421.319 19300.19 1839416.431

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