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You borrow $100,000 at 6 percent for 25 years to fund part of the purchase of a house. You repay the mortgage loan with equal

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Answer #1

Part A:

EMI = Loan / PVAF(r%, n)

= $ 100,000 / PVAF(0.5%, 300)

= $ 100,000 / 155.2069

= $ 644.30

Part B:

Int = Loan * Int Rate

= $ 100,000 * 0.5%

= $ 500

Principal repay = EMI - Int

= $ 644.30 - $ 500

= $ 144.30

Part C:

Total Int = [ EMI * No. if Instalments ] - Loan

= [ $ 644.30 * 25 ] - $ 100,000

= $ 193,290.42 - $ 100,000

= $ 93,290.42

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