since there are monthly payments, r = 0.05 / 12 = 0.00417
FV Principal: P(1 + r)^n
= 230,000(1.00417^(5yrs*12mos. per year)) = 295,172.5019
FVoa of the payments:FVoa = PMT[((1 + r)^n) -1) / r]
= 1234.69[((1.00417^60) -1 ) / 0.00417]
= 1234.69[0.28336 / 0.00417]
= 1234.69[68.00609]
= 83,966.43797
Remaining loan balance after 5 years: 295172.5019 - 83966.43797 = $211,206.0639, round to $211,206.06
Subtract above from original price of $240k = $28,793.94
Repeat for 10 years (n = 10yrs * 12months per year = 120) ; and 20 years, n = 240
FYI: I assumed you had the correct loan payment.
I thought you would have figured this one out by now. One way is to compute the Present Value of the remaining payments over the time remaining at the pmt amt and interest rate stated.
This is how much they still owe. So (230,000 + 10,000) - still owing = equity.
use a business calculator or PV formula in excel.
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The Taylors have purchased a $240,000 house. They made an initial down payment of $10,000 and secured a mortgage with interest charged at the rate of 5%/year on the unpaid balance. Interest computations are made at the end of each month. If the loan is to be amortized over 30 years, what monthly payment will the Taylors be required to make? (Round your answer to the nearest cent.)
Monthly payment is 1234.69
But what is their equity (disregarding appreciation) after 5 years? After 10 years? After 20 years? (Round your answers to the nearest cent.)
