You are purchasing a house that costs $635,000 with a 9%, 30-year mortgage. You make a 15% down payment on the mortgage.

Ignore monthly insurance and property tax escrow payments, and assume that the monthly mortgage payments are made at the end of the month; what is the amount of the monthly payments? What is the balance of the mortgage at the end of five years? What is the total amount of interest paid for the five years? Now suppose after 5 years you refinance your mortgage of 7% for the remaining balance owed for 30 years. What is your new monthly mortgage payment? If you continued to use your initial monthly payment at 9% instead of the new monthly mortgage payment at 7%; how many years would it take to pay off the remaining balance?

Table factors are provided in our LEO classroom; click on Content tab and then scroll down and click on Syllabus. The time value of money tables are on the right side of your screen labeled time value of money PoA link. If there isnt a table factor on the time value of money tables, then you will need to use the formula. The following are the formulas for the five tables: elude

A) Future value of a single sum: FV_i,n = (1+i)ⁿ

B) Present value of a single sum:

C) Future value of an ordinary annuity:

D) Present value of an ordinary annuity:

E) Present value of an annuity due:

Future value of an annuity due: There isnt a table or formula for the future value of annuity due. Instead, you use the future value of an ordinary annuity and multiply the table factor by 1 plus the interest rate.

Use five decimal places for your table factors. Round all other calculations using two decimal places and round all the final answers using zero decimal places. You can use excel.