Frank purchased his house 16 years ago by taking out a 25-year mortgage for $150,000. the mortgage has a fixed interest rate of 5 percent compounded monthly. if he wants to pay off his mortgage today, how much money does he need? he made his most recent mortgage payment earlier today.

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Business

Landen Barr

4 April, 12:55

Frank purchased his house 16 years ago by taking out a 25-year mortgage for $150,000. the mortgage has a fixed interest rate of 5 percent compounded monthly. if he wants to pay off his mortgage today, how much money does he need? he made his most recent mortgage payment earlier today.

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Answers (1)

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Isabella · Answer 1

The current value of the mortgage will be given by:

A=P (1+r/100) ^n

where:

P=$150,000

r=5%

n=16 years

therefore:

A=150000 (1+5/100) ^16

A=150000 (1.05) ^16

A=$201,014.35

If He wants to pay off his mortgage now, he needs $201,014.35