MONTHLY Payment factors Years 6% 7% 8% 9% 5 .01933 .01980 .02027 .0208 10 .01110
ID: 2740701 • Letter: M
Question
MONTHLY Payment factors
Years
6%
7%
8%
9%
5
.01933
.01980
.02027
.0208
10
.01110
.01161
.01213
.0127
15
.00844
.00898
.00955
.0101
20
.00716
.00775
.00836
.0090
25
.00644
.00706
.00771
.0084
30
.00600
.00665
.00733
.0080
The Yerkes borrowed $175,000 10 years ago at 7% for 30 years. If their monthly payments are $1,163.75, what is their loan balance today?
a. $100,237
b. $127,135
c. $149,399
e. $150,161
d. $178.000
Years
6%
7%
8%
9%
5
.01933
.01980
.02027
.0208
10
.01110
.01161
.01213
.0127
15
.00844
.00898
.00955
.0101
20
.00716
.00775
.00836
.0090
25
.00644
.00706
.00771
.0084
30
.00600
.00665
.00733
.0080
Explanation / Answer
FV = [PV*(1+r)^n] - P[((1+r)^n-1)/r]
where FV is the Future value (remanining balance)
PV = Present Value (original balance)
P = loan payment (per period)
r = interest rate period
n is the number of periods (after which remaining balance has to be found)
r = (7/12 ) = 0.583333333
n = 10*12 = 120
FV = [175,000*(1.005833333)^120] - [1163.75*((1.0058333)^120-1)/0.0058333]
= (351,690.7408) - (201,427.0013)
= 150,263.1812
Correct Answer is e.
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