Revision as of 23:37, 18 November 2023 by Admin (Created page with "'''Solution: C''' The monthly payment is <math> 200,000/a_{\overline{360}|0.05} = 1199.10</math>. Using the equivalent annual effective rate of 6.17%, the present value (at time 0) of the five extra payments is 41,929.54 which reduces the original loan amount to 200,000 – 41,929.54 = 158,070.46. The number of months required is the solution to <math display = "block">158, 070.46 = 1199.10 a_{\overline{n}|0.05}</math> Using calculator, n = 215.78 months are needed to...")
Exercise
ABy Admin
Nov 18'23
Answer
Solution: C
The monthly payment is [math] 200,000/a_{\overline{360}|0.05} = 1199.10[/math]. Using the equivalent annual effective rate of 6.17%, the present value (at time 0) of the five extra payments is 41,929.54 which reduces the original loan amount to 200,000 – 41,929.54 = 158,070.46. The number of months required is the solution to
[[math]]158, 070.46 = 1199.10 a_{\overline{n}|0.05}[[/math]]
Using calculator, n = 215.78 months are needed to pay off this amount. So there are 215 full payments plus one fractional payment at the end of the 216th month, which is December 31, 2020.
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