In order to solve this question, would I use the compounded monthly formula and then subtract the balance between the difference?  36.   If $50,000 is borrowed for a home mortgage, to be repaid at 10% interest over 30 years, what is the remaining loan balance after 20 years? Assume monthly payments are made. a.  $50,000b.  $42,957 c.  $32,590 D. $33,203e.  $20,651

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Asked Sep 28, 2019
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In order to solve this question, would I use the compounded monthly formula and then subtract the balance between the difference? 

 

36.   If $50,000 is borrowed for a home mortgage, to be repaid at 10% interest over 30 years, what is the remaining loan balance after 20 years? Assume monthly payments are made.

 

a.  $50,000b.  $42,957 c.  $32,590 D. $33,203e.  $20,651

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Expert Answer

Step 1

We will do it in following steps:

  • First we will find out what should be the monthly mortgage payment based on the given conditions.
  • Second, we will find out the present value of the remaining mortgage payments to get the value of the loan outstanding
Step 2

Please see the table on the white board. Figures in parenthesis, if any, mean negative values. All financials are in $. Adjacent cells...

A
C
99 Loan amount
50,000
10%
30
0.8333% B100/12
360 B101 12
$438.79 PMT(B102,B103,-B99)
100 Interest rate
101 Term (years)
102 Rate
103 Nper
104 Monthly payment
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A C 99 Loan amount 50,000 10% 30 0.8333% B100/12 360 B101 12 $438.79 PMT(B102,B103,-B99) 100 Interest rate 101 Term (years) 102 Rate 103 Nper 104 Monthly payment

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