Homework Answers
Loan amount(PV)= Value of home- Down payment=200000*(1-10%)=180000, Tenure(nper)=30*12=360 months, PMT=808.28, rate=?
![C PV Nper PMT rate D 180,000 3601 -808.28 =RATE(D2,D3,D1,0,0) RATE(nper, pmt, pv, [fv], [type], [guess])](http://img.homeworklib.com/questions/ee180f20-70ea-11ea-b437-33690acc49a5.png?x-oss-process=image/resize,w_560)
Monthly interest rate is 0.292%
Hence, yearly rate=(1+0.292%)^12-1=3.557%
After one year, they increase their monthly payment by $100 i.e. (808.28+100)=908.28. Now, below is amortization schedule:
Hence, after 24 month or 2 year they owe $171749 (approx) for the loan.
If they would have continue to pay $808.28/month, then the remaining loan would be 172.968.27. Calculation is given below:
Hence, they can realize FV=(214000-172968.27)=41031.73, nper=24, PMT=-808.27 and PV=-20000 (down payment)
![0 / P R S T U 41031.73! -20000| -808.27! I PVT PMT nper rate =RATE(P4,P3,P2,P1,0) RATE(nper, pmt, pv, [fv], [type], [guess])](http://img.homeworklib.com/questions/ef87fc20-70ea-11ea-9250-719a99cbe13f.png?x-oss-process=image/resize,w_560)
Hence, their monthly return is 0.227% considering they have paid $808.27 after taking the loan.
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