Question

Rahm took out a 25-year loan for $155,000 at an APR of 4.8%,compounded monthly, and he is making monthly payments of $888.15. What will his balance be with 17 years left

Answer 1

$123,692,61 this is for apex

Answer 2

His balance would be $123,692.06.

Explanation:

Since, future Value of Loan Balance Formula is,

`F.V.=P.V.(1+i)^n-(Pmt[(1+i)^n-1)/(i)`

Where,

P.V. is the principal amount of the loan,

i is the rate per period ( in decimals ),

Pmt is the payment per period,

n is the number of periods,

Here, P.V. = $155,000,

APR = 4.8 % = 0.048 ⇒ i =
`(0.048)/(12)=0.004`,

Pmt = $888.15 per month,

Since, loan is 25-year,

And, we have to find out his balance when 17 years left,

Thus, the number of years for which the payment is paid = 25 - 17 = 8,

⇒ Number of periods, n = 12 × 8 = 96 months ( 1 year = 12 months ),

Hence, the future value of the loan is,

`F.V.=155000(1+0.004)^(96)-(888.15[(1+0.004)^(96)-1])/(0.004)`

`=\$ 123692.057301\approx \$ 123692.06`

Therefore, his balance be with 17 years left would be $ 123,692.06.