I need help figuring out where I went wrong.
Question: Emily is purchasing a house for $185000 that appreciates at a rate of about 1.5% per year. She will finance this purchase with a 15-year mortgage at an interest rate of 3.9%, compounded semi-annually, with monthly payments, where she is required to make a 10% down payment. If she sells the house after 5 years at market value, what will be her final cost after the sale of the house?
First I figures out that the down payment would = $18500.00
So the PV = $166500.00
Next I input the info:
PV = 166500 Payments = ? FV = 0 Rate = 3.9 Periods = 180 Compounding = Semi-Annually
Input that and the payments = $1220.65
To calculate the amount paid after 5 years, I do: payment amount x years x # of payments.
So $1220.65 x 5 x 60 = $366.195.00
Then I change the # of periods in the app I use to 60 instead of 300 to find the amount paid. Which = $121 310.61
Add them all together and it = $506005.61
Next I find the amount of the house currently because of appreciation.
185000(1+0.015)^5 = $199297.54
Minus the two which = $306708.07
Am I missing something or doing something wrong?
Answer in book: $13752.05
What I was doing wrong was putting 60 payments instead of 12. Making the amount paid incorrect. After switching that, and doing everything the same I got the correct answer.