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## How Much Did They Owe?

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**THE SCENARIO**
Last time, I talked about a loan I was looking at recently. It's got a current balance of $198,984.80, a monthly P&I (Principal and Interest) payment of $1050.31, and has received 60 payments so far from the borrower. Its interest rate, as determined last time, is 4.00%.
**The question:** What was the original balance of the loan?

**THE SOLUTION**
This is very straightforward. We already have every piece of information we need to solve it.
First things first, make sure the calculator is using 12 Payments per Year.
N: 60 (The borrower has paid 60 payments on the loan)
I/YR: 4.00 (The interest rate on the loan is 4.00%)
PV: (This is what I'm trying to find)
PMT: -1,050.31 (The monthly P&I payment is $1,050.31)
FV: -198,984.80 (The borrower owes $198,984.80 today)
*actual* payment should be $1,050.313650024 each month (or something similar)... but we can't pay fractional pennies, so we round to the nearest (or next-highest) penny. Over the course of many months, the extra fractions of a penny add up, throwing off the totals ever-so-slightly. In the end, the differences usually end up being so tiny as to not be worth stressing over.

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The borrower originally borrowed **$220,000.22**.

What do you think? Did you notice that over 16.67% of the time (5 years out of 30), only 9.55% of the money ($21K of $220K) has been repaid? What lessons can you take from that piece of knowledge? Let us know in the comments!