RE 410, Spring 2007-2008(Keyi Xu)Assignment 1 – Solutions:1. Consider a constant payment mortgage of $100,000, maturity 30 years, interest rate 6%, monthly payments.(a) What is the monthly payment?Enter: N=360 [maturity months: 30*12], I=6 [annual rate], PV=$100,000 [Loan amount], implied FV=0 [don’t need to enter this].Press: PMT [you should get: $599.55](b) What is the principal payment and interest payment in the second month?Enter: 1, Input, 1, shift AmtSwitch between Amt, Int, and OLB by pressing “=” [this tells principle and interest paid in 1stmonth, as well as OLB at the end of 1stmonthRepeat the above two steps for 2ndmonth [Enter: 1, Input, 2, shift Amt, “=”]Amt paid during 2ndmonth: $199.60-$99.55 = $100.05Interest paid during 2ndmonth: $999.50-$500.00 = $499.50MonthPrinciple paid in this monthPrinciple paid so farInterest paid in this monthInterest paid so farOLB by the end of this month1st$99.55$99.55$500.00$500.00$99,900.452nd$100.05$199.60$499.50$999.50$99,800.40(c) What is the outstanding balance after 5 years?
This is the end of the preview.
access the rest of the document.