davidtrinh
New member
- Joined
- Dec 1, 2016
- Messages
- 10
How long does it take to pay off a $125000 mortgage if the annual interest rate is 5.5% and compounded monthly with a monthly payment of $710?
Below is my attempt.
I use the formula
FV = P* ((1+r/n)^(nt)-1)/(r/n)
where FV is future value, r is the interest rate, n is the number of compounding periods in a year, t is the elapsed time, and P is the principal.
12500 = 710*((1+0.055/12)^(12t)-1)/(0.055/12)
Next, I divide both sides by 710 and then multiply both 0.055/12.
3841.24 = (1.0045833333)^(12t)
Then, I take the log of both sides.
log3841.24 = 12t*log1.004583
Lastly, I solve for t and get t = 150 years.
But, the answer key says 30 years.
Can someone explain how to do the problem? Thanks a lot.
Below is my attempt.
I use the formula
FV = P* ((1+r/n)^(nt)-1)/(r/n)
where FV is future value, r is the interest rate, n is the number of compounding periods in a year, t is the elapsed time, and P is the principal.
12500 = 710*((1+0.055/12)^(12t)-1)/(0.055/12)
Next, I divide both sides by 710 and then multiply both 0.055/12.
3841.24 = (1.0045833333)^(12t)
Then, I take the log of both sides.
log3841.24 = 12t*log1.004583
Lastly, I solve for t and get t = 150 years.
But, the answer key says 30 years.
Can someone explain how to do the problem? Thanks a lot.