Question

A mortgage is paid off in 30 years with a lump sum payment of $124.000. It had a 2% interest rate that compounded
monthly
What was the principal?
Round your answer to the nearest cent and do not include the dollar sign. Do not round at any other point in the solving
process; only round your final answer.

Answer 1

Answer:

  68086.64

Step-by-step explanation:

The future value formula can be used.

  FV = P(1 +r/n)^(nt)

The future value of principal P at annual rate r compounded n times per year for t years.

  124000 = P(1 +0.02/12)^(12·30) = P·1.82120898

  P = 124000/1.82120898 ≈ 68086.64

The principal was $68,086.64.