document.write( "<A HREF=/cgi-bin/jump-to-question.mpl?question=1140077>Question 1140077</A>: <I><SPAN STYLE=\"word-break: break-all;\"> A real estate Speculator purchases a tract of land for $1000000 and assumes a 25 year mortgage at 4.2% interest compounded monthly.<BR>\n" );
document.write( "suppose that after five more years the mortgage is required to be paid in full.How much will then be due? </SPAN>\n" );
document.write( "</I><HR><TABLE width=100%><TR><TD><B><A HREF=http://www.algebra.com/>Algebra.Com's</A> Answer #760583 by </B><A HREF=/tutors/aboutme.mpl?userid=Theo><B>Theo(13342)</B></A><img src=\"/images/stars/stars-13.gif\" alt=\"\" >&nbsp;<A HREF=/tutors/aboutme.mpl?userid=Theo><IMG SRC=http://www.algebra.com/images/aboutme-small.gif BORDER=0 alt=\"About Me\" VALIGN=MIDDLE></A>&nbsp;<IMG SRC=http://www.algebra.com/cgi-bin/show-face.mpl?user=Theo><BR>You can <A HREF=\"/cgi-bin/embed-solution.mpl?show=1&solution=760583\">put this solution on YOUR website!</A><BR><SPAN STYLE=\"word-break: break-all;\"> tract of land equals 1 million dollars.\r<BR>\n" );
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document.write( "this is paid with a 25 year mortgage at 4.2% interest per year compounded monthly.\r<BR>\n" );
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document.write( "i used the texas instruments BA-II financial calculator.\r<BR>\n" );
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document.write( "first inputs were:\r<BR>\n" );
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document.write( "present value = 1000000<BR>\n" );
document.write( "future value = 0<BR>\n" );
document.write( "number of time periods = 25 years * 12 months per year = 300 months.<BR>\n" );
document.write( "interest rate per time period = 4.2% per year / 12 = .35% per month.<BR>\n" );
document.write( "payments made at the end of each month.\r<BR>\n" );
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document.write( "i tell the calculator to compute the payment amount.<BR>\n" );
document.write( "the calculator tells me that the monthly payment needs to be $5389.423179.\r<BR>\n" );
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document.write( "i change the number of time periods to 20 years * 12 months per year = 240 months.\r<BR>\n" );
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document.write( "i tell the calculator to compute the present value.<BR>\n" );
document.write( "the calculator tells me that the present value is equal to $874,096.4935.\r<BR>\n" );
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document.write( "what happened?\r<BR>\n" );
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document.write( "i first had the calculator tell me the payment amount for the 25 year loan.<BR>\n" );
document.write( "once i had the payment amount, i then had the calculator tell me the present value of that payment amount for 20 years.\r<BR>\n" );
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document.write( "the original number of months was 300.<BR>\n" );
document.write( "that set the payment amount.<BR>\n" );
document.write( "once that was set, the revised months was 240.<BR>\n" );
document.write( "300 minus 240 = 60 months = 5 years.\r<BR>\n" );
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document.write( "the present value of the same payments for the last 240 months is the remaining balance after the first 60 months are over.\r<BR>\n" );
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document.write( "this can be seen in more detail using excel, as shown below.\r<BR>\n" );
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document.write( "<IMG STYLE=\"max-width:80%;\" src = \"http://theo.x10hosting.com/2019/042931.jpg\" alt=\"$$$\">\r<BR>\n" );
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document.write( "<IMG STYLE=\"max-width:80%;\" src = \"http://theo.x10hosting.com/2019/042932.jpg\" alt=\"$$$\">\r<BR>\n" );
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document.write( "you can see from the excel printout that the remaining balance at the end of 60 months is $874,096.49.\r<BR>\n" );
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document.write( "that compares favorably to what i got using the TI-BA-II calculator, which showed me that the present value of the remaining 20 years on the loan was $874,096.4935.\r<BR>\n" );
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document.write( " </SPAN>\n" );
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