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(male narrator) So if a mortgage at a 6% interest rate
has payments of $1,000 a month,
uh...how much will the loan balance be
10 years from the end of the loan?
Now to answer this question,
what-what we're really looking for
is how much loan can we pay off
with payments of $1,000 a month for 10 years?
Uh...so to answer that question,
we know our monthly payments are $1,000.
We know our interest rate.
We know our compounds per year or payments per year is 12,
uh...and the number of years we're interested in is 10 years.
We're looking for how much loan can I pay off in 10 years?
So what we're looking for is, what would my loan amount be
if I took out a loan at 10 years
and could pay it off in 10 years?
Uh...so...we need to figure out P0,
knowing that our monthly payment is $1,000,
and knowing that our interest rate is .06,
knowing our years is 10...
And so we're gonna pull out our...our formula
for, uh...for loan payments, uh...and-and start calculating.
So 1 minus...let's see, .06 over 12 is .005,
negative 120, divided by .005,
uh...and then I can pull out my calculator
and calculate this out.
We end up with $90,000, uh...73.45.
So this tells us that we could pay off a $90,000 loan
with payments of $1,000 a month for 10 years.
And so regardless of how much my loan started at,
uh...this is going to be the balance of my loan
10 years from the end of the loan,
if I can pay it off with $1,000 a month
at that interest rate.