High School

Identify the correct formula to calculate the cumulative interest paid on a mortgage loan for the second year of the loan (periods 13-24), where the rate is 9%, the number of periods (nper) is 5, and the present value is $250,000.

A. `=CUMIPMT(.09*12, 30/12, -250000, 13, 24, 0)`
B. `=CUMIPMT(.09/12, 5*12, 250000, 13, 24, 0)`
C. `=CUMIPMT(.09/12, 5*12, 250000, 23, 24, 0)`
D. `=CUMIPMT(.09/12, 30/12, -250000, 13, 24, 0)`

Answer :

The correct formula to calculate the cumulative interest for the second year of a mortgage loan is option b: =CUMIPMT(.09/12, 5*12, 250000, 13, 24, 0). The answer is option a.

The correct formula to calculate the cumulative interest paid on a mortgage loan for the second year of the loan (periods 13-24) is:

=CUMIPMT(.09/12, 5*12, 250000, 13, 24, 0).

This formula uses the CUMIPMT function to find the cumulative interest paid over a range from the 13th to the 24th payment period.

The parameters used in the formula include the monthly interest rate (.09/12), the total number of payment periods (5 years * 12 months per year), the present value of the loan ($250,000), specifying the first period (13), the last period (24), and type 0 indicating that payments are made at the end of the period.

Hence, The answer is option a.

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