A homeowner has five years of monthly payments of $ 1,500 before she has paid off...
A homeowner has five years of monthly payments of $ 1,500 before she has paid off her house. If the interest rate is 4% APR, what is the remaining balance on her loan?
A. $ 114,028
B. $ 65, 159
C. $ 81, 449
D. $ 97, 738
Homework Answers
C. $81,449
PV of the ordinary annuity of $1,500 paid per month at a periodic interest rate of 4/12 = 0.33333% over 60 months.
Remaining balance on her loan = C × [1 - (1 + r)-t / r]
Remaining balance on her loan = $1,500 × [1 - (1.0033333)-60 / 0.0033333]
Remaining balance on her loan = $81,449
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