Another ERAT question mortgage, question, understand, afternoon

JonnyKay

I'm working an equity reversion after tax problem from Schweser's L2 practice exam book. It's the 1st session afternoon test, number 94. Anyway, the way I understand the formula works is Selling Price - Selling Costs - Outstanding mortgage balance - taxes payable.

It appears I'm screwing up the problem because I'm actually trying to calculate what the actual outstanding mortgage balance is at the end of the period. In their solution, they are just subtracting the original mortgage balance which assumes that there were no payments made in the five years.