Question

Suppose you buy a home and borrow $176,000 using a 30 year mortgage with an annual interest rate of 3.20% (compounded monthly). You recall your FI 302 professor talking about how increasing your monthly payment can save you both time and money. You decided to pay 10% more each month than what the bank suggests your payment should be. Given this, in how many years will you pay off the loan

Answer 1

Step-by-step explanation:

Rate of interest = 3.2 / 12 = .266667

No of terms = 12 x 30 = 360

amount = 176000

PMT = $ 761.14

Now the instalment is increased by 10% so

the instalment becomes = 761.14 + 76.11

= #837.25

No of years required from table

= 25.74 years.