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Math Help - Interest paid in a payment

  1. #1
    Newbie
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    Mar 2009
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    Interest paid in a payment

    Hello, I had a tough question recently in class that I couldn't figure out how to do on my financial calculator (HP10BII)

    Here's the problem: You are buying a house for $150,00 with a 10% down payment and a fixed-rate mortgage for the remainder at 8% for 20 years with MONTHLY payments. How much interest is paid on the 20th payment?

    Here's what I do and where I get stuck...

    150,000 (.1) = 15,000
    150,00 - 15,000 = 135,000 which is my PV (Present Value)
    now I have my interest at 8%/12 = 0.667 (Interest)
    and for my monthly payments it is 20x12 = 240 (# of payments)

    Now I know there some function to figure out how much interest is paid on the 20th payment but I don't know what I enter into the calculator to get it. So for a run-down here it what I entered into my calculator

    -135,000 [PV]
    0.667 [I]
    240 [N]
    and now I'm stuck

    Any help is appreciated!
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  2. #2
    MHF Contributor
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    Ponder this from the back.

    Assume a payment of 1.

    Principle in the last payment is v.
    Principle in the 2nd to last payment is v^2.
    Principle in the 3nd to last payment is v^3.

    etc.

    Interest in the last payment is 1-v.
    Interest in the 2nd to last payment is 1-v^2.
    Interest in the 3nd to last payment is 1-v^3.

    etc.
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