Answer:
1. The monthly payment is:
= $1,074.65
2. To solve this without a financial calculator, you will calculate the future value of the $150,000 at a discount rate of 0.5% (6%/12) for 240 months. Then the calculated Future Value is divided by 240 to obtain the monthly payment.
Explanation:
a) Data and Calculations:
Mortgage = $150,000
Interest rate = 6% per year
Monthly payments = 240 (20 * 12)
Period of mortgage = 20 years
N (# of periods) 240
I/Y (Interest per year) 6
PV (Present Value) 150000
FV (Future Value) 0
Results
PMT = $1,074.65
Sum of all periodic payments = $257,915.18
Total Interest = $107,915.18
Without a financial calculator (using future value table):
Future value factor of 0.5% for 240 = 1.7194345
Future value of $150,000 = $257,915.18 ($150,000 * 1.7194345)
Monthly payment = $1,074.65 ($257,915/18/240)
