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29 August, 06:01

Suppose you take out a 30-year mortgage for $100,000 with annual payments. The interest rate on the mortgage is 8%. When you have paid off half the mortgage, so that the value of the remaining payments is reduced to $50,000, how many more payments need to be made

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  1. 29 August, 09:06
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    Approximately 8 more payments need to be made.

    Explanation:

    Mortgage Amount = $100,000

    Interest Rate = 8%

    Time = 30 years

    Calculating Annual Payment,

    Using TVM Calculation,

    PMT = [PV = 100000, T = 30, FV = 0, I = 0.08]

    PMT = $8,882.74

    So,

    Annual Payment = $8,882.74

    Loan Balance = $50,000

    Calculating Time for Repayment,

    Using TVM Calculation,

    T = [PV = 50,000, PMT = - 8882.74, FV = 0, I = 0.08]

    T = ~8 years
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