please answer all three parts! Consider a home mortgage of $125,000 at a fixed A
ID: 3046918 • Letter: P
Question
please answer all three parts!
Consider a home mortgage of
$125,000
at a fixed APR of
9%
for
15
years.
a. Calculate the monthly payment.
This answer needs to be 2 decimal spaces.
b. Determine the total amount paid over the term of the loan.
This answer needs to be 2 decimal spaces.
c. Of the total amount paid, what percentage is paid toward the principal and what percentage is paid for interest.
answer in out of 100 percent for principal and out of 100 percent paid for interest.
a. The monthly payment is
$nothing.
(Do not round until the final answer. Then round to the nearest cent as needed.)
please answer all parts
Explanation / Answer
The mortgage repayment can be easily calculated using the PMT function in MS Excel. The syntax is as follows:
PMT(rate, nper, pv), where rate is the rate of interest per month, nper is the number of monthly instalments and pv is the present value, or the principal amount.
In our case, we have rate = ((9/100)/12) = 0.0075, nper = 15 x 12 = 180; pv = 125000
a. Using the abovementioned formula, the monthly payment = $ 1,267.83.
Please note in Excel, we will get the same number with a negative sign. That's because this amount is considered as an outflow from our bank account.
b. Total amount paid over the term of the loan = $ 1267.83 x 180 = $ 228, 209.98
c. We know the principal is $ 125,000. So the interest amount paid = 228,209.98 - 125,000 = $ 103,209.98
Principal percentage = (125000 / 228209.98) x 100 = 54.77%
Interest percentage = (103209.98 / 228209.98) x 100 = 45.23%
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