00:01
So a partially amortizing mortgage is made for the amount of $69 ,000.
00:08
So that's the loan amount for a term of 10 years.
00:13
And with a mortgage, we pay 12 times per year, so that's our frequency.
00:18
The borrower and lender agree that a balance of $21 ,800 will remain.
00:26
So the future value of the loan after those 10 years is going to be $21 ,800 remaining and will be repaid in a lump sum at that time.
00:40
Our interest rate is 7%.
00:44
Then what must be the monthly payment over the 10 -year period? well, then we have to first bring this back to time zero.
00:57
So what they're going to pay off or amount to be repaid before the lump sum is the present value equal to the loan amount minus the future value, which is going to be the lump sum.
01:26
Divided by 1 .07 over, let's see here, the monthly interest rate then is going to be r over n, which is 0 .07 over 12.
01:47
So this then is going to be divided by 1 plus 0 .07 over 12 to the 12 times 10 is 120.
02:01
And that is going to be then 69 ,000 minus 21800 divided by, let's see here, 0 .07 divided by 12.
02:17
That is 0 .00583 with repeating 3's...