Problem 4-1

A borrower obtains a fully amortizing CPM mortgage loan for $125,000 at 11 percent
interest for 20 years. What will be the monthly payment on the loan? What would the
initial six payments be with a CAM?

CPM Payment:
PV 125,000.00 Calculator solution: PV = -$125,000; i = 11/12%; n = 20x12; FV=0;
I 0.92% solve for PMT.
PMT = $1,290.24 (slight difference due to rounding.)
N 240
PMT ($1,290.24)
FV -

CAM Payments:
Month Beg. Bal. Int. Amort. Pmt. End. Bal.
1 125,000.00 1,145.83 520.83 1,666.67 124,479.17
2 124,479.17 1,141.06 520.83 1,661.89 123,958.33
3 123,958.33 1,136.28 520.83 1,657.12 123,437.50
4 123,437.50 1,131.51 520.83 1,652.34 122,916.67
5 122,916.67 1,126.74 520.83 1,647.57 122,395.83
6 122,395.83 1,121.96 520.83 1,642.80 121,875.00
7 121,875.00 1,117.19 520.83 1,638.02 121,354.17
8 121,354.17 1,112.41 520.83 1,633.25 120,833.33
9 120,833.33 1,107.64 520.83 1,628.47 120,312.50
10 120,312.50 1,102.86 520.83 1,623.70 119,791.67
11 119,791.67 1,098.09 520.83 1,618.92 119,270.83
12 119,270.83 1,093.32 520.83 1,614.15 118,750.00
13 118,750.00 1,088.54 520.83 1,609.38 118,229.17
14 118,229.17 1,083.77 520.83 1,604.60 117,708.33
15 117,708.33 1,078.99 520.83 1,599.83 117,187.50
16 117,187.50 1,074.22 520.83 1,595.05 116,666.67
17 116,666.67 1,069.44 520.83 1,590.28 116,145.83
18 116,145.83 1,064.67 520.83 1,585.50 115,625.00
19 115,625.00 1,059.90 520.83 1,580.73 115,104.17
20 115,104.17 1,055.12 520.83 1,575.95 114,583.33
21 114,583.33 1,050.35 520.83 1,571.18 114,062.50
22 114,062.50 1,045.57 520.83 1,566.41 113,541.67
23 113,541.67 1,040.80 520.83 1,561.63 113,020.83
24 113,020.83 1,036.02 520.83 1,556.86 112,500.00
25 112,500.00 1,031.25 520.83 1,552.08 111,979.17
26 111,979.17 1,026.48 520.83 1,547.31 111,458.33
27 111,458.33 1,021.70 520.83 1,542.53 110,937.50
28 110,937.50 1,016.93 520.83 1,537.76 110,416.67
29 110,416.67 1,012.15 520.83 1,532.99 109,895.83
30 109,895.83 1,007.38 520.83 1,528.21 109,375.00
31 109,375.00 1,002.60 520.83 1,523.44 108,854.17
32 108,854.17 997.83 520.83 1,518.66 108,333.33
33 108,333.33 993.06 520.83 1,513.89 107,812.50
34 107,812.50 988.28 520.83 1,509.11 107,291.67
35 107,291.67 983.51 520.83 1,504.34 106,770.83
36 106,770.83 978.73 520.83 1,499.57 106,250.00
37 106,250.00 973.96 520.83 1,494.79 105,729.17
38 105,729.17 969.18 520.83 1,490.02 105,208.33
39 105,208.33 964.41 520.83 1,485.24 104,687.50
40 104,687.50 959.64 520.83 1,480.47 104,166.67
41 104,166.67 954.86 520.83 1,475.69 103,645.83
42 103,645.83 950.09 520.83 1,470.92 103,125.00
43 103,125.00 945.31 520.83 1,466.15 102,604.17
44 102,604.17 940.54 520.83 1,461.37 102,083.33
45 102,083.33 935.76 520.83 1,456.60 101,562.50
46 101,562.50 930.99 520.83 1,451.82 101,041.67
47 101,041.67 926.22 520.83 1,447.05 100,520.83
48 100,520.83 921.44 520.83 1,442.27 100,000.00
49 100,000.00 916.67 520.83 1,437.50 99,479.17
50 99,479.17 911.89 520.83 1,432.73 98,958.33
51 98,958.33 907.12 520.83 1,427.95 98,437.50
52 98,437.50 902.34 520.83 1,423.18 97,916.67
53 97,916.67 897.57 520.83 1,418.40 97,395.83
54 97,395.83 892.80 520.83 1,413.63 96,875.00
55 96,875.00 888.02 520.83 1,408.85 96,354.17
56 96,354.17 883.25 520.83 1,404.08 95,833.33
57 95,833.33 878.47 520.83 1,399.31 95,312.50
58 95,312.50 873.70 520.83 1,394.53 94,791.67
59 94,791.67 868.92 520.83 1,389.76 94,270.83
60 94,270.83 864.15 520.83 1,384.98 93,750.00
61 93,750.00 859.38 520.83 1,380.21 93,229.17
62 93,229.17 854.60 520.83 1,375.43 92,708.33
63 92,708.33 849.83 520.83 1,370.66 92,187.50
64 92,187.50 845.05 520.83 1,365.89 91,666.67
65 91,666.67 840.28 520.83 1,361.11 91,145.83
66 91,145.83 835.50 520.83 1,356.34 90,625.00
67 90,625.00 830.73 520.83 1,351.56 90,104.17
68 90,104.17 825.95 520.83 1,346.79 89,583.33
69 89,583.33 821.18 520.83 1,342.01 89,062.50
70 89,062.50 816.41 520.83 1,337.24 88,541.67
71 88,541.67 811.63 520.83 1,332.47 88,020.83
72 88,020.83 806.86 520.83 1,327.69 87,500.00
73 87,500.00 802.08 520.83 1,322.92 86,979.17
74 86,979.17 797.31 520.83 1,318.14 86,458.33
 75 86,458.33 792.53 520.83 1,313.37 85,937.50
76 85,937.50 787.76 520.83 1,308.59 85,416.67
77 85,416.67 782.99 520.83 1,303.82 84,895.83
78 84,895.83 778.21 520.83 1,299.05 84,375.00
79 84,375.00 773.44 520.83 1,294.27 83,854.17
80 83,854.17 768.66 520.83 1,289.50 83,333.33
81 83,333.33 763.89 520.83 1,284.72 82,812.50
82 82,812.50 759.11 520.83 1,279.95 82,291.67
83 82,291.67 754.34 520.83 1,275.17 81,770.83
84 81,770.83 749.57 520.83 1,270.40 81,250.00
85 81,250.00 744.79 520.83 1,265.63 80,729.17
86 80,729.17 740.02 520.83 1,260.85 80,208.33
87 80,208.33 735.24 520.83 1,256.08 79,687.50
88 79,687.50 730.47 520.83 1,251.30 79,166.67
89 79,166.67 725.69 520.83 1,246.53 78,645.83
90 78,645.83 720.92 520.83 1,241.75 78,125.00
91 78,125.00 716.15 520.83 1,236.98 77,604.17
92 77,604.17 711.37 520.83 1,232.20 77,083.33
93 77,083.33 706.60 520.83 1,227.43 76,562.50
94 76,562.50 701.82 520.83 1,222.66 76,041.67
95 76,041.67 697.05 520.83 1,217.88 75,520.83
96 75,520.83 692.27 520.83 1,213.11 75,000.00
97 75,000.00 687.50 520.83 1,208.33 74,479.17
98 74,479.17 682.73 520.83 1,203.56 73,958.33
99 73,958.33 677.95 520.83 1,198.78 73,437.50
100 73,437.50 673.18 520.83 1,194.01 72,916.67
101 72,916.67 668.40 520.83 1,189.24 72,395.83
102 72,395.83 663.63 520.83 1,184.46 71,875.00
103 71,875.00 658.85 520.83 1,179.69 71,354.17
104 71,354.17 654.08 520.83 1,174.91 70,833.33
105 70,833.33 649.31 520.83 1,170.14 70,312.50
106 70,312.50 644.53 520.83 1,165.36 69,791.67
107 69,791.67 639.76 520.83 1,160.59 69,270.83
108 69,270.83 634.98 520.83 1,155.82 68,750.00
109 68,750.00 630.21 520.83 1,151.04 68,229.17
110 68,229.17 625.43 520.83 1,146.27 67,708.33
111 67,708.33 620.66 520.83 1,141.49 67,187.50
112 67,187.50 615.89 520.83 1,136.72 66,666.67
113 66,666.67 611.11 520.83 1,131.94 66,145.83
114 66,145.83 606.34 520.83 1,127.17 65,625.00
115 65,625.00 601.56 520.83 1,122.40 65,104.17
116 65,104.17 596.79 520.83 1,117.62 64,583.33
117 64,583.33 592.01 520.83 1,112.85 64,062.50
118 64,062.50 587.24 520.83 1,108.07 63,541.67
119 63,541.67 582.47 520.83 1,103.30 63,020.83
120 63,020.83 577.69 520.83 1,098.52 62,500.00
121 62,500.00 572.92 520.83 1,093.75 61,979.17
122 61,979.17 568.14 520.83 1,088.98 61,458.33
123 61,458.33 563.37 520.83 1,084.20 60,937.50
124 60,937.50 558.59 520.83 1,079.43 60,416.67
125 60,416.67 553.82 520.83 1,074.65 59,895.83
126 59,895.83 549.05 520.83 1,069.88 59,375.00
127 59,375.00 544.27 520.83 1,065.10 58,854.17
128 58,854.17 539.50 520.83 1,060.33 58,333.33
129 58,333.33 534.72 520.83 1,055.56 57,812.50
130 57,812.50 529.95 520.83 1,050.78 57,291.67
131 57,291.67 525.17 520.83 1,046.01 56,770.83
132 56,770.83 520.40 520.83 1,041.23 56,250.00
133 56,250.00 515.63 520.83 1,036.46 55,729.17
134 55,729.17 510.85 520.83 1,031.68 55,208.33
135 55,208.33 506.08 520.83 1,026.91 54,687.50
136 54,687.50 501.30 520.83 1,022.14 54,166.67
137 54,166.67 496.53 520.83 1,017.36 53,645.83
138 53,645.83 491.75 520.83 1,012.59 53,125.00
139 53,125.00 486.98 520.83 1,007.81 52,604.17
140 52,604.17 482.20 520.83 1,003.04 52,083.33
141 52,083.33 477.43 520.83 998.26 51,562.50
142 51,562.50 472.66 520.83 993.49 51,041.67
143 51,041.67 467.88 520.83 988.72 50,520.83
144 50,520.83 463.11 520.83 983.94 50,000.00
145 50,000.00 458.33 520.83 979.17 49,479.17
146 49,479.17 453.56 520.83 974.39 48,958.33
147 48,958.33 448.78 520.83 969.62 48,437.50
148 48,437.50 444.01 520.83 964.84 47,916.67
149 47,916.67 439.24 520.83 960.07 47,395.83
150 47,395.83 434.46 520.83 955.30 46,875.00
151 46,875.00 429.69 520.83 950.52 46,354.17
152 46,354.17 424.91 520.83 945.75 45,833.33
153 45,833.33 420.14 520.83 940.97 45,312.50
154 45,312.50 415.36 520.83 936.20 44,791.67
155 44,791.67 410.59 520.83 931.42 44,270.83
156 44,270.83 405.82 520.83 926.65 43,750.00
157 43,750.00 401.04 520.83 921.88 43,229.17
158 43,229.17 396.27 520.83 917.10 42,708.33
159 42,708.33 391.49 520.83 912.33 42,187.50
160 42,187.50 386.72 520.83 907.55 41,666.67
161 41,666.67 381.94 520.83 902.78 41,145.83
162 41,145.83 377.17 520.83 898.00 40,625.00
163 40,625.00 372.40 520.83 893.23 40,104.17
164 40,104.17 367.62 520.83 888.45 39,583.33
165 39,583.33 362.85 520.83 883.68 39,062.50
166 39,062.50 358.07 520.83 878.91 38,541.67
167 38,541.67 353.30 520.83 874.13 38,020.83
168 38,020.83 348.52 520.83 869.36 37,500.00
169 37,500.00 343.75 520.83 864.58 36,979.17
170 36,979.17 338.98 520.83 859.81 36,458.33
171 36,458.33 334.20 520.83 855.03 35,937.50
172 35,937.50 329.43 520.83 850.26 35,416.67
173 35,416.67 324.65 520.83 845.49 34,895.83
174 34,895.83 319.88 520.83 840.71 34,375.00
175 34,375.00 315.10 520.83 835.94 33,854.17
176 33,854.17 310.33 520.83 831.16 33,333.33
177 33,333.33 305.56 520.83 826.39 32,812.50
178 32,812.50 300.78 520.83 821.61 32,291.67
179 32,291.67 296.01 520.83 816.84 31,770.83
180 31,770.83 291.23 520.83 812.07 31,250.00
181 31,250.00 286.46 520.83 807.29 30,729.17
182 30,729.17 281.68 520.83 802.52 30,208.33
183 30,208.33 276.91 520.83 797.74 29,687.50
184 29,687.50 272.14 520.83 792.97 29,166.67
185 29,166.67 267.36 520.83 788.19 28,645.83
186 28,645.83 262.59 520.83 783.42 28,125.00
187 28,125.00 257.81 520.83 778.65 27,604.17
188 27,604.17 253.04 520.83 773.87 27,083.33
189 27,083.33 248.26 520.83 769.10 26,562.50
190 26,562.50 243.49 520.83 764.32 26,041.67
191 26,041.67 238.72 520.83 759.55 25,520.83
192 25,520.83 233.94 520.83 754.77 25,000.00
193 25,000.00 229.17 520.83 750.00 24,479.17
194 24,479.17 224.39 520.83 745.23 23,958.33
195 23,958.33 219.62 520.83 740.45 23,437.50
196 23,437.50 214.84 520.83 735.68 22,916.67
197 22,916.67 210.07 520.83 730.90 22,395.83
198 22,395.83 205.30 520.83 726.13 21,875.00
199 21,875.00 200.52 520.83 721.35 21,354.17
200 21,354.17 195.75 520.83 716.58 20,833.33
201 20,833.33 190.97 520.83 711.81 20,312.50
202 20,312.50 186.20 520.83 707.03 19,791.67
203 19,791.67 181.42 520.83 702.26 19,270.83
204 19,270.83 176.65 520.83 697.48 18,750.00
205 18,750.00 171.88 520.83 692.71 18,229.17
206 18,229.17 167.10 520.83 687.93 17,708.33
207 17,708.33 162.33 520.83 683.16 17,187.50
208 17,187.50 157.55 520.83 678.39 16,666.67
209 16,666.67 152.78 520.83 673.61 16,145.83
210 16,145.83 148.00 520.83 668.84 15,625.00
211 15,625.00 143.23 520.83 664.06 15,104.17
212 15,104.17 138.45 520.83 659.29 14,583.33
213 14,583.33 133.68 520.83 654.51 14,062.50
214 14,062.50 128.91 520.83 649.74 13,541.67
215 13,541.67 124.13 520.83 644.97 13,020.83
216 13,020.83 119.36 520.83 640.19 12,500.00
217 12,500.00 114.58 520.83 635.42 11,979.17
218 11,979.17 109.81 520.83 630.64 11,458.33
219 11,458.33 105.03 520.83 625.87 10,937.50
220 10,937.50 100.26 520.83 621.09 10,416.67
221 10,416.67 95.49 520.83 616.32 9,895.83
222 9,895.83 90.71 520.83 611.55 9,375.00
223 9,375.00 85.94 520.83 606.77 8,854.17
224 8,854.17 81.16 520.83 602.00 8,333.33
225 8,333.33 76.39 520.83 597.22 7,812.50
226 7,812.50 71.61 520.83 592.45 7,291.67
227 7,291.67 66.84 520.83 587.67 6,770.83
228 6,770.83 62.07 520.83 582.90 6,250.00
229 6,250.00 57.29 520.83 578.13 5,729.17
230 5,729.17 52.52 520.83 573.35 5,208.33
231 5,208.33 47.74 520.83 568.58 4,687.50
232 4,687.50 42.97 520.83 563.80 4,166.67
233 4,166.67 38.19 520.83 559.03 3,645.83
234 3,645.83 33.42 520.83 554.25 3,125.00
235 3,125.00 28.65 520.83 549.48 2,604.17
236 2,604.17 23.87 520.83 544.70 2,083.33
237 2,083.33 19.10 520.83 539.93 1,562.50
238 1,562.50 14.32 520.83 535.16 1,041.67
239 1,041.67 9.55 520.83 530.38 520.83
240 520.83 4.77 520.83 525.61 0.00
 1 percent
at would the
 Problem 4-2
A fully amortizing mortgage loan is made for $80,000 at 9 percent interest for 25 years.
Payments are to be made monthly. Calculate:

PV 80,000.00
I 0.75%
N 300
PMT ($671.36)
FV -

a) Monthly payment.
($671.36)

b) Interest and principal payments during month 1. 71.36 600.00

Total Principal and total interest paid over Ttl. Principal: 80,000.00
c) 25 years. Ttl. Interest: 121,407.13

The outstanding loan balance if the loan is repaid at the $66,191.38

d)
end of year 10.

Total monthly interest and principal Ttl. Principal: 13,808.62

e)
payments through year 10. Ttl. Interest: 66,754.24

What would the breakdown of interest Interest 568.45

f)
and principal be during month 50? Principal 102.91

Period Beg. Bal. Pmt. Int. Prin. End. Bal.

1 80,000.00 671.36 600.00 71.36 79,928.64
2 79,928.64 671.36 599.46 71.89 79,856.75
3 79,856.75 671.36 598.93 72.43 79,784.32
4 79,784.32 671.36 598.38 72.97 79,711.34
5 79,711.34 671.36 597.84 73.52 79,637.82
6 79,637.82 671.36 597.28 74.07 79,563.75
7 79,563.75 671.36 596.73 74.63 79,489.12
8 79,489.12 671.36 596.17 75.19 79,413.93
9 79,413.93 671.36 595.60 75.75 79,338.18
10 79,338.18 671.36 595.04 76.32 79,261.86
11 79,261.86 671.36 594.46 76.89 79,184.96
12 79,184.96 671.36 593.89 77.47 79,107.50
13 79,107.50 671.36 593.31 78.05 79,029.44
14 79,029.44 671.36 592.72 78.64 78,950.81
15 78,950.81 671.36 592.13 79.23 78,871.58
16 78,871.58 671.36 591.54 79.82 78,791.76
17 78,791.76 671.36 590.94 80.42 78,711.34
18 78,711.34 671.36 590.34 81.02 78,630.32
19 78,630.32 671.36 589.73 81.63 78,548.69
20 78,548.69 671.36 589.12 82.24 78,466.45
21 78,466.45 671.36 588.50 82.86 78,383.59
22 78,383.59 671.36 587.88 83.48 78,300.11
23 78,300.11 671.36 587.25 84.11 78,216.00
24 78,216.00 671.36 586.62 84.74 78,131.27
25 78,131.27 671.36 585.98 85.37 78,045.89
26 78,045.89 671.36 585.34 86.01 77,959.88
27 77,959.88 671.36 584.70 86.66 77,873.22
28 77,873.22 671.36 584.05 87.31 77,785.92
29 77,785.92 671.36 583.39 87.96 77,697.95
30 77,697.95 671.36 582.73 88.62 77,609.33
31 77,609.33 671.36 582.07 89.29 77,520.04
32 77,520.04 671.36 581.40 89.96 77,430.09
33 77,430.09 671.36 580.73 90.63 77,339.46
34 77,339.46 671.36 580.05 91.31 77,248.14
35 77,248.14 671.36 579.36 92.00 77,156.15
36 77,156.15 671.36 578.67 92.69 77,063.46
37 77,063.46 671.36 577.98 93.38 76,970.08
38 76,970.08 671.36 577.28 94.08 76,876.00
39 76,876.00 671.36 576.57 94.79 76,781.21
40 76,781.21 671.36 575.86 95.50 76,685.71
41 76,685.71 671.36 575.14 96.21 76,589.50
42 76,589.50 671.36 574.42 96.94 76,492.56
43 76,492.56 671.36 573.69 97.66 76,394.90
44 76,394.90 671.36 572.96 98.40 76,296.51
45 76,296.51 671.36 572.22 99.13 76,197.37
46 76,197.37 671.36 571.48 99.88 76,097.50
47 76,097.50 671.36 570.73 100.63 75,996.87
48 75,996.87 671.36 569.98 101.38 75,895.49
49 75,895.49 671.36 569.22 102.14 75,793.35
50 75,793.35 671.36 568.45 102.91 75,690.44
51 75,690.44 671.36 567.68 103.68 75,586.76
52 75,586.76 671.36 566.90 104.46 75,482.31
53 75,482.31 671.36 566.12 105.24 75,377.07
54 75,377.07 671.36 565.33 106.03 75,271.04
55 75,271.04 671.36 564.53 106.82 75,164.21
56 75,164.21 671.36 563.73 107.63 75,056.59
57 75,056.59 671.36 562.92 108.43 74,948.15
58 74,948.15 671.36 562.11 109.25 74,838.91
59 74,838.91 671.36 561.29 110.07 74,728.84
60 74,728.84 671.36 560.47 110.89 74,617.95
61 74,617.95 671.36 559.63 111.72 74,506.23
62 74,506.23 671.36 558.80 112.56 74,393.67
63 74,393.67 671.36 557.95 113.40 74,280.27
64 74,280.27 671.36 557.10 114.26 74,166.01
65 74,166.01 671.36 556.25 115.11 74,050.90
66 74,050.90 671.36 555.38 115.98 73,934.92
67 73,934.92 671.36 554.51 116.85 73,818.08
68 73,818.08 671.36 553.64 117.72 73,700.36
69 73,700.36 671.36 552.75 118.60 73,581.75
70 73,581.75 671.36 551.86 119.49 73,462.26
71 73,462.26 671.36 550.97 120.39 73,341.87
72 73,341.87 671.36 550.06 121.29 73,220.57
 73 73,220.57 671.36 549.15 122.20 73,098.37
74 73,098.37 671.36 548.24 123.12 72,975.25
75 72,975.25 671.36 547.31 124.04 72,851.21
76 72,851.21 671.36 546.38 124.97 72,726.24
77 72,726.24 671.36 545.45 125.91 72,600.33
78 72,600.33 671.36 544.50 126.85 72,473.47
79 72,473.47 671.36 543.55 127.81 72,345.67
80 72,345.67 671.36 542.59 128.76 72,216.90
81 72,216.90 671.36 541.63 129.73 72,087.17
82 72,087.17 671.36 540.65 130.70 71,956.47
83 71,956.47 671.36 539.67 131.68 71,824.78
84 71,824.78 671.36 538.69 132.67 71,692.11
85 71,692.11 671.36 537.69 133.67 71,558.45
86 71,558.45 671.36 536.69 134.67 71,423.78
87 71,423.78 671.36 535.68 135.68 71,288.10
88 71,288.10 671.36 534.66 136.70 71,151.40
89 71,151.40 671.36 533.64 137.72 71,013.68
90 71,013.68 671.36 532.60 138.75 70,874.93
91 70,874.93 671.36 531.56 139.80 70,735.13
92 70,735.13 671.36 530.51 140.84 70,594.29
93 70,594.29 671.36 529.46 141.90 70,452.39
94 70,452.39 671.36 528.39 142.96 70,309.42
95 70,309.42 671.36 527.32 144.04 70,165.39
96 70,165.39 671.36 526.24 145.12 70,020.27
97 70,020.27 671.36 525.15 146.21 69,874.07
98 69,874.07 671.36 524.06 147.30 69,726.76
99 69,726.76 671.36 522.95 148.41 69,578.36
100 69,578.36 671.36 521.84 149.52 69,428.84
101 69,428.84 671.36 520.72 150.64 69,278.20
102 69,278.20 671.36 519.59 151.77 69,126.43
103 69,126.43 671.36 518.45 152.91 68,973.52
104 68,973.52 671.36 517.30 154.06 68,819.46
105 68,819.46 671.36 516.15 155.21 68,664.25
106 68,664.25 671.36 514.98 156.38 68,507.88
107 68,507.88 671.36 513.81 157.55 68,350.33
108 68,350.33 671.36 512.63 158.73 68,191.60
109 68,191.60 671.36 511.44 159.92 68,031.68
110 68,031.68 671.36 510.24 161.12 67,870.56
111 67,870.56 671.36 509.03 162.33 67,708.23
112 67,708.23 671.36 507.81 163.55 67,544.69
113 67,544.69 671.36 506.59 164.77 67,379.91
114 67,379.91 671.36 505.35 166.01 67,213.91
115 67,213.91 671.36 504.10 167.25 67,046.65
116 67,046.65 671.36 502.85 168.51 66,878.15
117 66,878.15 671.36 501.59 169.77 66,708.38
118 66,708.38 671.36 500.31 171.04 66,537.33
119 66,537.33 671.36 499.03 172.33 66,365.00
120 66,365.00 671.36 497.74 173.62 66,191.38
121 66,191.38 671.36 496.44 174.92 66,016.46
122 66,016.46 671.36 495.12 176.23 65,840.23
123 65,840.23 671.36 493.80 177.56 65,662.67
124 65,662.67 671.36 492.47 178.89 65,483.79
125 65,483.79 671.36 491.13 180.23 65,303.56
126 65,303.56 671.36 489.78 181.58 65,121.98
127 65,121.98 671.36 488.41 182.94 64,939.04
128 64,939.04 671.36 487.04 184.31 64,754.72
129 64,754.72 671.36 485.66 185.70 64,569.02
130 64,569.02 671.36 484.27 187.09 64,381.93
131 64,381.93 671.36 482.86 188.49 64,193.44
132 64,193.44 671.36 481.45 189.91 64,003.54
133 64,003.54 671.36 480.03 191.33 63,812.21
134 63,812.21 671.36 478.59 192.77 63,619.44
135 63,619.44 671.36 477.15 194.21 63,425.23
136 63,425.23 671.36 475.69 195.67 63,229.56
137 63,229.56 671.36 474.22 197.14 63,032.43
138 63,032.43 671.36 472.74 198.61 62,833.81
139 62,833.81 671.36 471.25 200.10 62,633.71
140 62,633.71 671.36 469.75 201.60 62,432.10
141 62,432.10 671.36 468.24 203.12 62,228.99
142 62,228.99 671.36 466.72 204.64 62,024.35
143 62,024.35 671.36 465.18 206.17 61,818.17
144 61,818.17 671.36 463.64 207.72 61,610.45
145 61,610.45 671.36 462.08 209.28 61,401.17
146 61,401.17 671.36 460.51 210.85 61,190.33
147 61,190.33 671.36 458.93 212.43 60,977.90
148 60,977.90 671.36 457.33 214.02 60,763.87
149 60,763.87 671.36 455.73 215.63 60,548.24
150 60,548.24 671.36 454.11 217.25 60,331.00
151 60,331.00 671.36 452.48 218.87 60,112.12
152 60,112.12 671.36 450.84 220.52 59,891.61
153 59,891.61 671.36 449.19 222.17 59,669.44
154 59,669.44 671.36 447.52 223.84 59,445.60
155 59,445.60 671.36 445.84 225.52 59,220.09
156 59,220.09 671.36 444.15 227.21 58,992.88
157 58,992.88 671.36 442.45 228.91 58,763.97
158 58,763.97 671.36 440.73 230.63 58,533.34
159 58,533.34 671.36 439.00 232.36 58,300.99
160 58,300.99 671.36 437.26 234.10 58,066.89
161 58,066.89 671.36 435.50 235.86 57,831.03
162 57,831.03 671.36 433.73 237.62 57,593.41
163 57,593.41 671.36 431.95 239.41 57,354.00
164 57,354.00 671.36 430.15 241.20 57,112.80
165 57,112.80 671.36 428.35 243.01 56,869.79
166 56,869.79 671.36 426.52 244.83 56,624.95
167 56,624.95 671.36 424.69 246.67 56,378.28
168 56,378.28 671.36 422.84 248.52 56,129.76
169 56,129.76 671.36 420.97 250.38 55,879.38
170 55,879.38 671.36 419.10 252.26 55,627.12
171 55,627.12 671.36 417.20 254.15 55,372.96
172 55,372.96 671.36 415.30 256.06 55,116.90
173 55,116.90 671.36 413.38 257.98 54,858.92
174 54,858.92 671.36 411.44 259.92 54,599.01
175 54,599.01 671.36 409.49 261.86 54,337.14
176 54,337.14 671.36 407.53 263.83 54,073.32
177 54,073.32 671.36 405.55 265.81 53,807.51
178 53,807.51 671.36 403.56 267.80 53,539.71
179 53,539.71 671.36 401.55 269.81 53,269.90
180 53,269.90 671.36 399.52 271.83 52,998.07
181 52,998.07 671.36 397.49 273.87 52,724.19
182 52,724.19 671.36 395.43 275.93 52,448.27
183 52,448.27 671.36 393.36 278.00 52,170.27
184 52,170.27 671.36 391.28 280.08 51,890.19
185 51,890.19 671.36 389.18 282.18 51,608.01
186 51,608.01 671.36 387.06 284.30 51,323.72
187 51,323.72 671.36 384.93 286.43 51,037.29
188 51,037.29 671.36 382.78 288.58 50,748.71
189 50,748.71 671.36 380.62 290.74 50,457.97
190 50,457.97 671.36 378.43 292.92 50,165.04
191 50,165.04 671.36 376.24 295.12 49,869.93
192 49,869.93 671.36 374.02 297.33 49,572.59
193 49,572.59 671.36 371.79 299.56 49,273.03
194 49,273.03 671.36 369.55 301.81 48,971.22
195 48,971.22 671.36 367.28 304.07 48,667.15
196 48,667.15 671.36 365.00 306.35 48,360.79
197 48,360.79 671.36 362.71 308.65 48,052.14
198 48,052.14 671.36 360.39 310.97 47,741.18
199 47,741.18 671.36 358.06 313.30 47,427.88
200 47,427.88 671.36 355.71 315.65 47,112.23
201 47,112.23 671.36 353.34 318.02 46,794.22
202 46,794.22 671.36 350.96 320.40 46,473.81
203 46,473.81 671.36 348.55 322.80 46,151.01
204 46,151.01 671.36 346.13 325.22 45,825.79
205 45,825.79 671.36 343.69 327.66 45,498.12
206 45,498.12 671.36 341.24 330.12 45,168.00
207 45,168.00 671.36 338.76 332.60 44,835.40
208 44,835.40 671.36 336.27 335.09 44,500.31
209 44,500.31 671.36 333.75 337.60 44,162.71
210 44,162.71 671.36 331.22 340.14 43,822.57
211 43,822.57 671.36 328.67 342.69 43,479.88
212 43,479.88 671.36 326.10 345.26 43,134.63
213 43,134.63 671.36 323.51 347.85 42,786.78
214 42,786.78 671.36 320.90 350.46 42,436.32
215 42,436.32 671.36 318.27 353.08 42,083.24
216 42,083.24 671.36 315.62 355.73 41,727.50
217 41,727.50 671.36 312.96 358.40 41,369.10
218 41,369.10 671.36 310.27 361.09 41,008.02
219 41,008.02 671.36 307.56 363.80 40,644.22
220 40,644.22 671.36 304.83 366.53 40,277.69
221 40,277.69 671.36 302.08 369.27 39,908.42
222 39,908.42 671.36 299.31 372.04 39,536.37
223 39,536.37 671.36 296.52 374.83 39,161.54
224 39,161.54 671.36 293.71 377.65 38,783.89
225 38,783.89 671.36 290.88 380.48 38,403.42
226 38,403.42 671.36 288.03 383.33 38,020.09
227 38,020.09 671.36 285.15 386.21 37,633.88
228 37,633.88 671.36 282.25 389.10 37,244.78
229 37,244.78 671.36 279.34 392.02 36,852.75
230 36,852.75 671.36 276.40 394.96 36,457.79
231 36,457.79 671.36 273.43 397.92 36,059.87
232 36,059.87 671.36 270.45 400.91 35,658.96
233 35,658.96 671.36 267.44 403.91 35,255.05
234 35,255.05 671.36 264.41 406.94 34,848.10
235 34,848.10 671.36 261.36 410.00 34,438.11
236 34,438.11 671.36 258.29 413.07 34,025.03
237 34,025.03 671.36 255.19 416.17 33,608.87
238 33,608.87 671.36 252.07 419.29 33,189.57
239 33,189.57 671.36 248.92 422.44 32,767.14
240 32,767.14 671.36 245.75 425.60 32,341.54
241 32,341.54 671.36 242.56 428.80 31,912.74
242 31,912.74 671.36 239.35 432.01 31,480.73
243 31,480.73 671.36 236.11 435.25 31,045.48
244 31,045.48 671.36 232.84 438.52 30,606.96
245 30,606.96 671.36 229.55 441.80 30,165.16
246 30,165.16 671.36 226.24 445.12 29,720.04
247 29,720.04 671.36 222.90 448.46 29,271.58
248 29,271.58 671.36 219.54 451.82 28,819.76
249 28,819.76 671.36 216.15 455.21 28,364.55
250 28,364.55 671.36 212.73 458.62 27,905.93
251 27,905.93 671.36 209.29 462.06 27,443.87
252 27,443.87 671.36 205.83 465.53 26,978.34
253 26,978.34 671.36 202.34 469.02 26,509.32
254 26,509.32 671.36 198.82 472.54 26,036.78
255 26,036.78 671.36 195.28 476.08 25,560.70
256 25,560.70 671.36 191.71 479.65 25,081.05
257 25,081.05 671.36 188.11 483.25 24,597.80
258 24,597.80 671.36 184.48 486.87 24,110.93
259 24,110.93 671.36 180.83 490.53 23,620.40
260 23,620.40 671.36 177.15 494.20 23,126.20
261 23,126.20 671.36 173.45 497.91 22,628.29
262 22,628.29 671.36 169.71 501.64 22,126.64
263 22,126.64 671.36 165.95 505.41 21,621.23
264 21,621.23 671.36 162.16 509.20 21,112.04
265 21,112.04 671.36 158.34 513.02 20,599.02
266 20,599.02 671.36 154.49 516.86 20,082.15
267 20,082.15 671.36 150.62 520.74 19,561.41
268 19,561.41 671.36 146.71 524.65 19,036.77
269 19,036.77 671.36 142.78 528.58 18,508.19
270 18,508.19 671.36 138.81 532.55 17,975.64
271 17,975.64 671.36 134.82 536.54 17,439.10
272 17,439.10 671.36 130.79 540.56 16,898.54
273 16,898.54 671.36 126.74 544.62 16,353.92
274 16,353.92 671.36 122.65 548.70 15,805.22
275 15,805.22 671.36 118.54 552.82 15,252.40
276 15,252.40 671.36 114.39 556.96 14,695.43
277 14,695.43 671.36 110.22 561.14 14,134.29
278 14,134.29 671.36 106.01 565.35 13,568.94
279 13,568.94 671.36 101.77 569.59 12,999.35
280 12,999.35 671.36 97.50 573.86 12,425.49
281 12,425.49 671.36 93.19 578.17 11,847.32
282 11,847.32 671.36 88.85 582.50 11,264.82
283 11,264.82 671.36 84.49 586.87 10,677.95
284 10,677.95 671.36 80.08 591.27 10,086.68
285 10,086.68 671.36 75.65 595.71 9,490.97
286 9,490.97 671.36 71.18 600.17 8,890.80
287 8,890.80 671.36 66.68 604.68 8,286.12
288 8,286.12 671.36 62.15 609.21 7,676.91
289 7,676.91 671.36 57.58 613.78 7,063.13
290 7,063.13 671.36 52.97 618.38 6,444.75
291 6,444.75 671.36 48.34 623.02 5,821.72
292 5,821.72 671.36 43.66 627.69 5,194.03
293 5,194.03 671.36 38.96 632.40 4,561.63
294 4,561.63 671.36 34.21 637.14 3,924.48
295 3,924.48 671.36 29.43 641.92 3,282.56
296 3,282.56 671.36 24.62 646.74 2,635.82
297 2,635.82 671.36 19.77 651.59 1,984.23
298 1,984.23 671.36 14.88 656.48 1,327.76
299 1,327.76 671.36 9.96 661.40 666.36
300 666.36 671.36 5.00 666.36 0.00
201,407 121,407 80,000.00
 Problem 4-3
A constant payment, fully amortizing mortgage loan is made for $100,000 at 8 percent interest
for 30 years. What would payments be if they are calculated:

Monthly Payment Quarterly Payment

PV 100,000.00 PV 100,000.00
I 0.67% I 2.00%
N 360 N 120
PMT ($733.76) PMT ($2,204.81)
FV - FV -

Annual Payment Weekly Payment

PV 100,000.00 PV 100,000.00
I 8.00% I 0.15%
N 30 N 1560
PMT ($8,882.74) PMT ($169.23)
FV - FV -
 Problem 4-4
Regarding problem 3, how much total interest and principal would be paid over the entire 30-
year life of the mortgage in each case? Which payment pattern would have the greatest
amount of interest payable over 30-year term of the loan? Why?

Monthly Payment
PV 100,000.00 Total Pmt: 264,155.25
I 0.67% Ttl. Principal: 100,000.00
N 360 Ttl. Interest: 164,155.25
PMT ($733.76)
FV -

Quarterly Payment
PV 100,000.00 Total Pmt: 264,577.16
I 2.00% Ttl. Principal: 100,000.00
N 120 Ttl. Interest: 164,577.16
PMT ($2,204.81)
FV -

Annual Payment
PV 100,000.00 Total Pmt: 266,482.30
I 8.00% Ttl. Principal: 100,000.00
N 30 Ttl. Interest: 166,482.30
PMT ($8,882.74)
FV -

Weekly Payment
PV 100,000.00 Total Pmt: 263,993.12
I 0.15% Ttl. Principal: 100,000.00
N 1560 Ttl. Interest: 163,993.12
PMT ($169.23)
FV -

The greatest amount of interest payable is with the Annual Payment Plan because
you are making payments less frequently. Therefore, reducing you balance less
frequently and paying interest on a greater amount each year.
 Problem 4-5
5. A fully amortizing mortgage loan is made for $100,000 at 8 percent interest for 20 years.

a. Calculate the monthly payment for a CPM mortgage.

PV 100,000.00
I 0.67%
N 240
PMT ($836.44)
FV -

b.
What will the total of payments be for the entire 20-year period? Of this total how much will be interest?

Total Pmt: 200,745.62

Ttl. Principal: 100,000.00
Ttl. Interest: 100,745.62

c. Assume the loan is repaid at the end of 8 years. What will be the outstanding balance? How much total
interest will have been collected by then?
PV $100,000.00 Total Pmt: 80,298.25
I 0.67% Mort. Bal. ($77,272.68)
N 96 Principal 22,727.33
PMT ($836.44) Ttl. Int. paid 57,570.92
FV ($77,272.68)

d. The borrower now chooses to reduce the loan balance by $5,000 at the end of year 5.
(1) What will be the new loan maturity assuming that loan payments are not reduced?

PV $87,525.58
I 0.67%
N 180
PMT ($836.44)
FV -

(2)Assume the loan maturity will not be reduced. What will the new payments be?

PV $82,525.58 PV $82,525.58
I 0.67% I 0.67%
N 161.37 N 180.00
PMT ($836.44) PMT ($788.66)
FV - FV -
 Problem 4-6

A 30-year fully amortizing mortgage loan was made 10 years ago for $75,000 at 10 percent
interest. “The borrower would like to prepay the mortgage balance by $10,000.

a. Assuming he can reduce his monthly mortgage payments, what is the new mortgage payment?

PV 75,000.00 PV 68,203.51 PV 58,203.51

I 0.83% I 0.83% I 0.83%
N 360 N 240 N 240
PMT (658.18) PMT (658.18) PMT (561.68)
FV - FV - FV -

b. Assuming the loan maturity is shortened and using the original monthly payments, what is the new loan
maturity?

PV 58,203.51
I 0.83%
N 160.91
PMT (658.18)
FV -
 Problem 4-7

A fully amortizing mortgage is made for $100,000 at 7.5 percent interest. If the monthly
payments were $1,000 per month, when will the loan be repaid?

PV 100,000.00
I 0.63%
N 157.42
PMT (1,000.00)
FV -
 Problem 4-8

A fully amortizing mortgage is made for $80,000 for 25 years. Total monthly payments will be
$900 per month. What is the interest rate on the loan?

PV 80,000.00
I 1.08% 12.96%
N 300.00
PMT (900.00)
FV -
 Problem 4-9

A partially amortizing mortgage is made for $60,000 for a term of 10 years. The borrower and
lender agree that a balance of $20,000 will remain and be repaid as a lump sum at that time.

a. If the interest rate is 9 percent, what must monthly payments be over the 10 – year period?

PV (60,000.00)
I 0.75%
N 120
PMT 656.70
FV 20,000.00

b. If the borrower chooses to repay the loan after 5 years instead of at the end of year 10, what must the loan
balance be?

PV ($44,409.60)
I 0.75%
N 60
PMT 656.70
FV 20,000.00
 Problem 4-10

An “interest only” mortgage is made for $80,000 at 12 percent interest for 10 years. The lender
and borrower agree that monthly payments will be constant and will require no loan
amortization.

a. What will the monthly payments be?

PV 80,000.00
I 1.00%
N 120
PMT (800.00)
FV (80,000.00)

b. What will be the loan balance after 5 years?

PV 80,000.00
I 1.00%
N 60
PMT (800.00)
FV (80,000.00)

c. If the loan is repaid after 5 years, what will be the yield to the lender?

PV 80,000.00
I 1.00% 12%
N 60
PMT (800.00)
FV (80,000.00)

d. Instead of being repaid after 5 years, what will be the yield if the loan is repaid after 10 years?

PV 80,000.00
I 1.00% 12%
N 60
PMT (800.00)
FV (80,000.00)