What is the outstanding balance after 23 payments on a 20-year mortgage that has monthly payments of $1062.32 and an interest rate of 6.6% compounded monthly?

Question

Quizplus · Accepted Answer

We can use the formula for a mortgage loan to calculate the outstanding balance after 23 payments. The formula is:

B = L[(1 + c)^n - (1 + c)^p]/[(1 + c)^n - 1]

Where:
B = outstanding balance
L = loan amount
c = monthly interest rate = 6.6%/12 = 0.0055
n = total number of payments = 20 years x 12 months/year = 240
p = number of payments already made = 23

Plugging in the values, we get:

B = $200,000[(1 + 0.0055)^240 - (1 + 0.0055)^23]/[(1 + 0.0055)^240 - 1]
B ≈ $134,402.54

Therefore, the answer is C.

What Is the Outstanding Balance After 23 Payments on a 20-Year