Here is the problem you need to solve:

1. On a \$250,000 mortgage amortized over 30 years (360 months) at an interest rate of 11%, what would be the monthly payment?
2. On a \$125,000 mortgage with monthly payments of \$1,049.00 at an interest rate of 9%, what is the length of time this mortgage is amortized over?
3. On a \$100,000 mortgage amortized over 20 years (240 months) with monthly payments of \$1,118.56, what would the interest rate be?
4. If a mortgage is amortized over 30 years (360 months) at an interest rate of 10% and monthly payments of \$2,632.71, what is the original value of the mortgage?
5. If a mortgage is amortized over 30 years (360 payments) at a 9.5% interest rate for \$150,000 and there is a balloon due in 15 years (180 payments), what would be the monthly payment amount and the balloon amount? (This is a two-part question.)

Here is the solution:

3. On a \$100,000 mortgage amortized over 20 years (240 months) with monthly payments of \$1,118.56, what would the interest rate be?

The question is asking us what the interest rate on this mortgage would be, therefore, we can conclude that we are solving for I in this example. The mortgage is amortized over 20 years, so we would enter 240 into N. It’s a \$100,000 mortgage, so we would enter that amount into PV. The monthly payment amount is \$1,118.56, so we would enter that into PMT. There is no talk of a balloon payment in this example, so we would enter 0 into FV. The answer, as listed above, should be 12.25%.

Here is the answers are listed in bold.

 Example # N I PV PMT FV 1. 360 11% \$250,000 \$-2,380.81 0 2. 300 9% \$125,000 \$-1,049.00 0 3. 240 12.25% (Ans) \$100,000 \$-1,118.56 0