I am trying to figure out how to compute the numbers in the table on CFAI text vol 5, pp174-175. The book says mortgage payment is calculated from a formula in Chapter 19 of Fabozzi’s “Fixed Income Mathematics” book. Does anyone happen to know what that formula is like? I know it is not in the syllabus but I am curious. Thanks in advance.
present value of mortgage payments = loan amount c/(1+r)+ … + c/(1+r)^T = F, where r is the monthly interest rate I’m sure you can figure out the formula from here.
Really? But monthly payment seems to be not fixed in the example given on pp 174-175