Question

Mindy has a 20-year adjustable rate mortgage with a rate of 3.6% for the first 4 years. The monthly payment is $1,375.01. The amount of the mortgage is $235,000. What is the remaining balance after 4 years rounded to the nearest dollar?

$188,000

$200,464

$169,000

$191,026

Answer 1

Can you use most if the information to recalculate the initial payment?

Answer 2

Can I use 1,375.01 and 235,000

Answer 3

Nope. Use everything except the payment and recalculate the payment.

20 years
3.6%
$235,000

Answer 4

I plug it into this M=B[((i)(1+i)^(n*t))/((1+i)^(n*t)-(1))

Answer 5

That should be the right formula. See if you match my results.

i = 0.036
j = I/12
v = 1/(1+j)
n = 240

I use this one: \(235000 = Pmt\cdot\dfrac{v-v^{n+1}}{1-v}\)

This creates Pmt = 1375.01

The solution is to work the formula a second time

Without the Total Amount. This is what we need to find.
With the Payment: 1375.01
With n = 16*12 = 192 (4 years less)

Answer 6

would I=r/n ?

Answer 7

No, the definitions are provided above for my version. The version from your book or course materials should have similar versions.

j = i/n = 0.036/12 in this case.
Your formula doesn't use 'v', which, in my opinion, make life simpler.

Answer 8

@tkhunny I got 1068.42

Answer 9

loan amount: 235 000
interest to be compounded:3.6%
monthly payments: 1 375.01
after 4 years (48 months) the balance remaing is just:

Bk^n - P(1-k^n)/(1-k)

235000k^(48)-1375.01(1-k^(48))/(1-k), k=1+.036/12

Answer 10

all they are asking you is what the remaining balance would be in order to restructure the loan after the initial period ends; or if this was a balloon mortgage ... the amount of the balloon payment