Question

Your firm has taken out a 521,000 loan with 8.6% APR (compounded monthly) for some commercial property. As is common in commercial real estate, the loan is a 5-year loan based on a 15-year amortization. This means that your loan payments will be calculated as if you will take 15 years to pay off the loan, but you actually must do so in 5 years. To do this, you will make 59 equal payments based on the 15-year amortization schedule and then make a final 60th payment to pay the remaining balance.
A. What will your monthly payments be?
B. What will your final payment be?

Answer 1

Answer:

The monthly payment will be = $5161.08

The final payment will be: = $413,684.38

Explanation:

From the given information:

Given that:

the loan amount = $521000

The interest rate for the loan is = 8.6% compounded monthly

the loan is being amortized for 15 years

Thus, the firm will be paying the due amount after 15 years

We use the Excel software to find the monthly payment and the final payment.

a. Using the Excel Function  ( =PMT(8.6%/12,15*12,-521000) )

The monthly payment will be = $5161.08

b.Using the Excel Function (=CUMPRINC(8.6%/12,15*12,521000,60,180,1) )

The final payment will be: = $413,684.38

These can be seen in the images attached below.