What is the monthly payment for a $800,000 mortgage for the first 119 payments that is due in 10 years, has a 25 year amortization, at 5% interest? What is the amount of the 120th payment?
I use excel to compute the amortization table,
But, I'm still don't understand the question. If I finish the loan at payment 300, for 25 years or I ended at 120 with a full balloon payment.
I ask my professor and he told me: 'If mortgage due in 10 then final payment is a balloon payment including interest and principal'.
Question: I need to know what schedule I suppose to calculate (on excel or any other way that could be easier), and some hint to understand what actually the problem ask.
Thanks!
Let be $L=800,000$ the loan to be repayed in $t=25$ years (or $n=300$ months) and $P$ the monthly payment at nominal interest $i^{(12)}=5\%$ convertible monthly.
The effective monthly interest rate is $i_m=\frac{i^{(12)}}{12}=0.42\%$ an then we have $$ L=P\,a_{\overline{n}|i_m}=P\frac{1-(1+i_m)^{-n}}{i} $$ from wich we find the constant payment $$ P=\frac{L}{a_{\overline{300}|0.42\%}}=4,676.72 $$