While painting your neighbors’ home, the painters spilled a bucket of paint on s
ID: 2793949 • Letter: W
Question
While painting your neighbors’ home, the painters spilled a bucket of paint on some important papers,
including the amortization schedule for their home mortgage. Since your neighbors know that you are
in their neighbourhood, they gave you the only two rows of the amortization schedule that were legible:
99 $2,218.39 $658.33 $1,560.06 $261,773.66
100 $2,218.39 $662.22 $1,556.17 $263,333.72
Required: Assuming that the mortgage’s payments were monthly (in arrears), help them determine:
a. The amount of interest paid in month 100;
b. The mortgage’s APR;
c. The initial amount of the mortgage; and
d. The original length of the mortgage
Explanation / Answer
By the look of it it seems that the first coloumn has the fixed monthly payment. Second row is the principle payment (since that is increasing in next month) as we know principle component increases whereas interst component decreases as we move ahead. Thus third component is the Interest payment and finally 4th coloumn is the total outstanding loan today
a. Amount of interest paid in month 100 is $1556.17
Somehow, this data seems wrong. Not able to figure out what is the last coloumn. It cannot be total outstading balance of loan as it should decrease going forward. It cannot be total interest paid as total installment paid is 2218*100 which is less than $263,333,72
Kindly correct the data and then it can be solved.
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