Joe bought an apartment and got a mortgage of $500,000. The mortgage has a nomin

Question

Joe bought an apartment and got a mortgage of $500,000. The mortgage has a nominal yearly interest rate of 6 percent, and is paid back in 300 equal monthly payments beginning from the day the loan was received. 80 percent of the principal of the loan is linked to the inflation rate.

The combined inflation rate over the many years that elapsed between when the day the loan was received and the day of the 150th payment, is 66.66%

I need to give an approximation of how much of the loan is left after 150 monthly payments are made.

The answer is supposed to be:

Before taking into account the inflation rate, the balance left is $339,386

After taking into account the inflation rate, it becomes $747,000 so that is the answer.

I don't understand how they arrived at this answer. Please help. Thank you.

Explanation / Answer

This is correct values

The values given by you is approximate values so there is a difference in the answers

Term amount 1666.666667 (500000/300) Interest amount 30000 500000*6% For month 30000/12 2500 (for 150 (2500/2 = 1250 For 150 payments 1666.66*150   = 249999 1250*150         = 187500 Total principle and interest is     =                             = 437499 Add inflation 66.66% We get             = 288749.34 Then add 288749.34 and 437499 is   = 726248.34

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