Question

A young executive is going to purchase a vacation property for investment purposes. She needs to borrow $102,000.00 for 30 years at 5.1% compounded monthly, and will make monthly payments of $553.81. If needed, round to 2 decimal places. a) What is the unpaid balance after 9 months?

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Answer 1

To calculate the unpaid balance after 9 months, we can use the formula for the remaining loan balance on an amortizing loan:

Unpaid Balance = Principal * (1 + Monthly Interest Rate)^Number of Payments - (Monthly Payment / Monthly Interest Rate) * ((1 + Monthly Interest Rate)^Number of Payments - 1)

Given the following information:

Principal (loan amount): $102,000.00

Monthly interest rate: 5.1% compounded monthly

Number of payments made: 9 months

Monthly payment amount: $553.81

Using the above formula, the unpaid balance after 9 months would be approximately $100,501.40.