Question

Given the following the data:

home loan amount 340,000

interest 4.6%

loan term in years : 20 yrs

1)Calculate the monthly payment

2)Calculate the present value given 12 years

3) If the annual increase in home value is 7% yearly, calculate the value of the home at the time of the present value.

thank you

I know monthly payment is 2,169.33

stuck on present value after 12 years

Answer 1

I agree with your monthly payment, mine was 2169.40 , no big deal

2. The wording is confusing. Do you want the outstanding balance of the loan after 12 years? Seems like the only logical thing to find

balance = 340000(1.003833333)^144 - 2169.33(1.003833333^144 - 1)/.0083333333
=

3. value of home after 12 years = 340000(1.07)^12 = ????

(you would still have the liability of your loan against that, don't know if you would want to subtract that)

Answer 2

3 yes, value to owner is cash he has to buy new house = value - what he owes bank.