1- Problem A fully amortizing mortgage loan is made for $60,000 at 6 percent interest for 20 years. Payments are to be made monthly. Calculate:

a. Monthly payments.

b. Interest and principal payments during month 1.

c. Total principal and total interest paid over 20 years.

d. The outstanding loan balance if the loan is repaid at the end of year 10.

e. Total monthly interest and principal payments through year 10.

(a) Monthly payment (PMT(n,i,PV,FV)= Solution: niPVFV====20126%/12or.50$60,0000 Solve for payment: PMT= (b) Month 1: interest payment: PV(6%/12)=. principal payment: PMT - interest payment = (c) Entire 25 Year Period: total payments: PMTx240= totalprincipalpayment(PV):$60,000 total interest payments: TotalpaymentsPV= (d) Outstanding loan balance if repaid at end of ten years = Solution: niPMTPVorFV:FV=====120(payoffperiod)6%/12or0.50$60,000 Solve for FV: (e) Trough ten years: total payments: PMT 120= total principal payment (principal reduction): PV Ending balance year 10(FV question d)= *PV of loan at the end of year 10 total interest payment: total payments - total principal payment =