MONTHLY Payment factors Years 6% 7% 8% 9% 5 .01933 .01980 .02027 .0208 10 .01110

Question

MONTHLY Payment factors

Years

6%

7%

8%

9%

5

.01933

.01980

.02027

.0208

10

.01110

.01161

.01213

.0127

15

.00844

.00898

.00955

.0101

20

.00716

.00775

.00836

.0090

25

.00644

.00706

.00771

.0084

30

.00600

.00665

.00733

.0080

The Yerkes borrowed $175,000 10 years ago at 7% for 30 years. If their monthly payments are $1,163.75, what is their loan balance today?

a. $100,237

b. $127,135

c. $149,399

e. $150,161

d. $178.000

Years

6%

7%

8%

9%

5

.01933

.01980

.02027

.0208

10

.01110

.01161

.01213

.0127

15

.00844

.00898

.00955

.0101

20

.00716

.00775

.00836

.0090

25

.00644

.00706

.00771

.0084

30

.00600

.00665

.00733

.0080

Explanation / Answer

FV = [PV*(1+r)^n] - P[((1+r)^n-1)/r]

where FV is the Future value (remanining balance)

PV = Present Value (original balance)

P = loan payment (per period)

r = interest rate period

n is the number of periods (after which remaining balance has to be found)

r = (7/12 ) = 0.583333333

n = 10*12 = 120

FV = [175,000*(1.005833333)^120] - [1163.75*((1.0058333)^120-1)/0.0058333]

   = (351,690.7408) - (201,427.0013)

   = 150,263.1812

Correct Answer is e.

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