Revision as of 21:39, 4 December 2023 by Admin (Created page with "You are considering buying a two bedroom apartment in Back Bay for $600,000. You plan to make a $100,000 down payment and take out a $500,000 30-year mortgage for the rest. The interest rate on the mortgage is 8.5% monthly APR. How much do you owe the bank immediately after the 60th monthly payment? <ul class="mw-excansopts"> <li>$187,389</li> <li>$225,125</li> <li>$395,250</li> <li>$477,451</li> <li>$542,766</li> </ul> '''References''' {{cite web |url=https://alo.mi...")
ABy Admin
Dec 04'23
Exercise
You are considering buying a two bedroom apartment in Back Bay for $600,000. You plan to make a $100,000 down payment and take out a $500,000 30-year mortgage for the rest. The interest rate on the mortgage is 8.5% monthly APR.
How much do you owe the bank immediately after the 60th monthly payment?
- $187,389
- $225,125
- $395,250
- $477,451
- $542,766
References
Lo, Andrew W.; Wang, Jiang. "MIT Sloan Finance Problems and Solutions Collection Finance Theory I" (PDF). alo.mit.edu. Retrieved November 30, 2023.
ABy Admin
Dec 04'23
Solution: D
[[math]]\frac{3844.57}{0.0070833}\left[1-\frac{1}{1.0070833}^{(12 \times 30-60)}\right]=\$ 477,451.33[[/math]]
References
Lo, Andrew W.; Wang, Jiang. "MIT Sloan Finance Problems and Solutions Collection Finance Theory I" (PDF). alo.mit.edu. Retrieved November 30, 2023.