Future Value after "n" payments...(I'll do this in sections b/c the formula is long)
FV = Principal(1 +r)^n -
Payment[ ((1 + r)^n - 1) / r ]
In your case you would subtract the number you get above from the $320,000 initial value.
Although the formula may LOOK complicated, it's really just:
the Future Value of the Principal after "n" periods minus the Future Value of "n" payments (using Future Value ordinary annuity formula)
Example: after 5 years, or (12 x 5)= 60 monthly payments, r = 0.07 / 12 = 0.00583
FV = 300,000(1.00583^60) -
1995.91[((1.00583^60) - 1) / 0.00583]
= 425,287.57 -
142,892.98
= 282,394.59
320,000 - 282,394.59 = $37,605.41
Now you should be able to answer for the other time periods! I hope this was helpful for you.
P S You also should have said "disregarding depreciating" b/c that happens, too.
Your problem assumes the house value stays static.
The Taylors have purchased a $320,000 house. They made an initial down payment of $20,000 and secured a mortgage with interest charged at the rate of 7%/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 Taylor's be required to make?
i found that the monthly payments are 1995.91...
now I have to find the equity (disregarding appreciation) after 5 years? After 10 years? After 20 years?
