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Solve for Loan Amount rather than PMT


sbg2
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Hopefully someone can help me or point me to an article that can help. FMP has a built in function (PMT) to calculalate a Mortgage payment based on LoanAmount, InterestRate, and NumberOfPayments. However, I would like to figure out what the LoanAmount would be if the known figures were Payment, IntertRate and NumberOfPayments.

I have manually entered the formula for the PMT function as shown below. It has been so long since I had a math class I dont know where to begin to try to solve for LoanAmount. The file containing the formula is attached (FM7). Any help appreciated.

Loan = 100,000

InterestRate = 7%

LoanYears = 30

Let ( [ IntDec = InterestRate * .01;

IntPer = IntDec/12;

NoPayments = LoanYears * 12;

Payment = (Loan*(1+IntPer)^NoPayments*IntPer)/(((1+IntPer)^NoPayments) -1)

]; Payment)

Payment = $665.30

z_M.zip

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Cant you just use PV() ?

Let ( [ IntDec = InterestRate * .01;

IntPer = IntDec/12;

NoPayments = LoanYears * 12

]; Round ( PV ( PaymentPerMonth ; IntPer ; NoPayments ); 2 ))

But I am curious... If you are trying to figure out a mortgage payment, dont you have to figure out the ammortization instead of a fixed number?

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Sorry, FMP's example threw me. Never did like word problems.

FMP Help FIle:

Your cousin borrowed $2,000 from you, offering to pay you back $500 a year for five years, for a total of $2,500 at the end of five years. If inflation was 5 percent annually, with the following entry you could find out what those payments are worth with the PV function.

PV(500;.05;5) returns 2164.73833531....

If I strip down their example to the following it reads much easier (for me at least):

Your cousin can pay you back $500 a year for five years. If you charge 5 percent interest annually how much can your cousin borrow?

PV(500;.05;5) returns 2164.73833531....

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