A mortgage of P500,000 is to be paid in monthly payments for 3 years. If the rate of interest is 9% compor monthly, (a) how much is the monthly payment if made at the end of each month? (b) how much outstanding liability after the 25th payment? and (c) how much is the interest on the 20th payment?

A mortgage of P500,000 is to be paid in monthly payments for 3 years. If the rate of interest is 9% compor monthly, (a) how much is the monthly payment if made at the end of each month? (b) how much outstanding liability after the 25th payment? and (c) how much is the interest on the 20th payment?

EBK CFIN

6th Edition

ISBN:9781337671743

Author:BESLEY

Publisher:BESLEY

Chapter4: Time Value Of Money

Section: Chapter Questions

Problem 19PROB

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Concept explainers

Amortized Loans

The term "amortization" refers to spreading the value of a loan or a debt over a series of regular payments or installments comprising of both the principal and interest amount. It generally involves the process where in the value of a loan or an intangible asset is written down over its maturity period.

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1. A mortgage of P500,000 is to be paid in monthly payments for 3 years. If the rate of interest is 9% compounded
monthly, (a) how much is the monthly payment if made at the end of each month? (b) how much is the
outstanding liability after the 25th payment? and (c) how much is the interest on the 20th payment?

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