08.07.2022 - 14:10

# Jerry bought a house for $400,000 and made an$80,000 down payment. He obtained a 30-year load for the remaining amount. Payments were made monthly. The nominal annual interest rate was 6%. After 10 y

Question:

Jerry bought a house for $400,000 and made an$80,000 down payment. He obtained a 30-year load for the remaining amount. Payments were made monthly. The nominal annual interest rate was 6%. After 10 years (120 payments) he sold the house and paid off the loan’s remaining balance.

a) What was his monthly loan payment?

b) What must he have paid (in addition to his regular 120th monthly payment) to pay off the loan? Calculate the answers to this problem using Microsoft Excel’s built in economic functions.

• a) Jerry's monthly loan payment can be calculated using the PMT function in Excel. The formula is =PMT(rate/12, n, -pv) where rate is the nominal annual interest rate, n is the total number of payments (30 years x 12 months = 360), and pv is the present value (remaining loan amount after down payment). Using the given information, we have: rate = 6% n = 360 months pv = $320,000 ($400,000 - $80,000) Plugging these values into the formula, we get: =PMT(6%/12, 360, -320000) =$1,917.54 Therefore, Jerry's monthly loan payment was $1,917.54. b) In order to calculate the additional payment Jerry must make to pay off the loan, we can use the PV function in Excel. The formula is =PV(rate/12, n, pmt, [fv], [type]) where rate, n, and pmt are the same as before. Fv is the future value of the loan balance (which should be zero at the end of 120 payments) and type can be left blank or set to 0. Using the same values as before and assuming a future value of zero, we get: =PV(6%/12, 240, 1917.54, 0) =$228,861.38 Therefore, Jerry must pay an additional $228,861.38 (in addition to his regular 120th monthly payment) to pay off the loan after 10 years. Do you know the answer? Not sure about the answer? Find the right answer to the question Jerry bought a house for$400,000 and made an \$80,000 down payment. He obtained a 30-year load for the remaining amount. Payments were made monthly. The nominal annual interest rate was 6%. After 10 y by subject Business, and if there is no answer or no one has given the right answer, then use the search and try to find the answer among similar questions.