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P 5-17 (similar to Question Help * You have just sold your house for $900,000 in

ID: 2794398 • Letter: P

Question

P 5-17 (similar to Question Help * You have just sold your house for $900,000 in cash. Your mortgage was originally a 30-year mortgage with monthly payments and an initial balance of $800,000. The mortgage is currently exactly 18, years old, and you have just made a payment. If the interest rate on the mortgage is 5.25% (APR. how much cash will you have from the sale once you pay off the mortgage? (Note: Be careful not to round any intermediate steps less than six decimal places.) Cash that remains after payoff of mortgage is $ (Round to the nearest dollar.)

Explanation / Answer

5-17

monthly installment

=800000/((1-(1+(5.25%/12))^(-30*12))/(5.25%/12))

=4417.63

current loan amount pending

=4417.63*((1-(1+(5.25%/12))^(-11.5*12))/(5.25%/12))

=456931.45

cash remains after payoff=900000-456931.45

=443068.55

the above is the answer

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