01-24-2014, 03:45 PM | #1 |
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[University - Finance] Trouble with Mortgage Payment Calculation
Hey, so I have a finance assignment due, and I'm stuck on the last question. Here it is:
I'm working on a), but I'm unsure of some things. Here's what I've done so far: - I calculated the Effective Annual Rate by doing EAR = [1 + 0.03 / 2]^2 -1 = 0.030225 = 3.02% Then converted it to the monthly quoted rate Q/m = (EAR + 1)^(1/m) - 1 Q/12= (1.0302)^(1/12) - 1 = 1.002482489 - 1 = 0.248% I think that part's right. The problem is that when I go to calculate the payment amount, I'm not sure what the PV amount should be. I used $480,000 as (house price - down payment amount) = ($600,000 - $120,000)... but I don't know if that's right. Then: $480,000 = C x (1-PV factor)/r = C x (1-(1/1.002482489^(240)))/0.00248 = C x (1-0.551529996)0.00248 = C x 180.8347 C (total periodic payment) = $2654.36 Total = 2654.36*12*20 = $637,045.87 Does that look right for the monthly payment/total?
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RIP Steve Van Ness <3 Last edited by Netjet!; 01-24-2014 at 03:59 PM.. |
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