Question

Elaine takes out a $100,000 mortgage on December 1, 1997. Elaine will repay the mortgage over 20 years with level monthly payments at an effective annual interest rate of 8%. The first payment is due January 1, 1998. After making her 120th payment, Elaine does not make any new payments for the entire next year. Elaine starts making revised monthly payments, of amount P, beginning January 1, 2009. The amount Pis such that Elaine will pay off the loan in the original, 20-year term-that is to say, her last payment will be due December 1, 2017. Determine P. A Less than $900 At least $900, but less than $975 с At least $975, but less than $1,050 At least $1,050, but less than $1,125 $1,125 or more

Answer 1

=PMT(8%/12,120,-FV(8%/12,120,PMT(8%/12,12*20,-100000),-100000))
=$836.44007

Option A Less than $900