5. Harriet Marcus is concerned about the financing of a home. She saw a small co

Question

5. Harriet Marcus is concerned about the financing of a home. She saw a small cottage that sells for $46,000. Assuming that she puts 30% down, what will be her monthly payment and the total cost of interest over the cost of the loan for each assumption? (Use the Table 15.1(a) and Table 15.1(b)). (Round intermediate calculations and your final answers to the nearest cent.) Monthly payment Total cost of interest a. 25 Years, 10.5% $ $ b. 25 Years, 11.5% $ $ c. 25 Years, 12.5% $ $ d. 25 Years, 14.0% $ $ e. What is the savings in interest cost between 10.5% and 14%? (Round intermediate calculations to 2 decimal places. Round your answer to the nearest dollar amount.) Interest cost $ f. If Harriet uses 30 years instead of 25 for both 10.5% and 14%, what is the difference in interest? (Use 360 days a year. Round intermediate calculations to 2 decimal places. Round your answer to the nearest dollar amount.) Interest difference $

Explanation / Answer

cost of house

46000

amount financed

46000*(1-.3)

32200

Loan period 25 years

Interest rate = interest rate /12

Amount of loan

Using PMT function in MS excel = PMT(rate,nper,pv,fv,type)

Montly payment

Amount of monthly payment

300

0.88%

32200

PMT(0.88%,300,32200,0,0)

($305.41)

Amount of monthly payment

300

0.96%

32200

PMT(0.96%,300,32200,0,0)

($327.77)

Amount of monthly payment

300

1.04%

32200

PMT(1.04%,300,32200,0,0)

($350.61)

Amount of monthly payment

300

1.17%

32200

PMT(1.17%,300,32200,0,0)

($388.60)

Loan period 25 years

Interest rate

Montly payment

total payment during the period = monthly payment*no of months

amount of funds borrowed

Total interest paid during the loan period

Amount of monthly payment

300

0.88%

($305.41)

($91,622.22)

32200

($59,422.22)

Amount of monthly payment

300

0.96%

($327.77)

($98,332.20)

32200

($66,132.20)

Amount of monthly payment

300

1.04%

($350.61)

($105,184.07)

32200

($72,984.07)

Amount of monthly payment

300

1.17%

($388.60)

($116,579.10)

32200

($84,379.10)

What is the savings in interest cost between 10.5% and 14%

Monthly saving

388.60-305.41

83.19

Saving in Interest cost between 10.5% and 14% (during the life of loan)

84379.10-59422.22

24956.88

If Harriet uses 30 years instead of 25 for both 10.5% and 14%

Loan period 25 years

Interest rate = interest rate /12

Amount of loan

Using PMT function in MS excel = PMT(rate,nper,pv,fv,type)

Montly payment

Amount of monthly payment

360

0.88%

32200

PMT(0.88%,360,32200,0,0)

($295.99)

Amount of monthly payment

360

1.17%

32200

PMT(1.17%,360,32200,0,0)

($382.55)

Difference in interest (monthly)

382.55-295.99

86.56

cost of house

46000

amount financed

46000*(1-.3)

32200

Loan period 25 years

Interest rate = interest rate /12

Amount of loan

Using PMT function in MS excel = PMT(rate,nper,pv,fv,type)

Montly payment

Amount of monthly payment

300

0.88%

32200

PMT(0.88%,300,32200,0,0)

($305.41)

Amount of monthly payment

300

0.96%

32200

PMT(0.96%,300,32200,0,0)

($327.77)

Amount of monthly payment

300

1.04%

32200

PMT(1.04%,300,32200,0,0)

($350.61)

Amount of monthly payment

300

1.17%

32200

PMT(1.17%,300,32200,0,0)

($388.60)

Loan period 25 years

Interest rate

Montly payment

total payment during the period = monthly payment*no of months

amount of funds borrowed

Total interest paid during the loan period

Amount of monthly payment

300

0.88%

($305.41)

($91,622.22)

32200

($59,422.22)

Amount of monthly payment

300

0.96%

($327.77)

($98,332.20)

32200

($66,132.20)

Amount of monthly payment

300

1.04%

($350.61)

($105,184.07)

32200

($72,984.07)

Amount of monthly payment

300

1.17%

($388.60)

($116,579.10)

32200

($84,379.10)

What is the savings in interest cost between 10.5% and 14%

Monthly saving

388.60-305.41

83.19

Saving in Interest cost between 10.5% and 14% (during the life of loan)

84379.10-59422.22

24956.88

If Harriet uses 30 years instead of 25 for both 10.5% and 14%

Loan period 25 years

Interest rate = interest rate /12

Amount of loan

Using PMT function in MS excel = PMT(rate,nper,pv,fv,type)

Montly payment

Amount of monthly payment

360

0.88%

32200

PMT(0.88%,360,32200,0,0)

($295.99)

Amount of monthly payment

360

1.17%

32200

PMT(1.17%,360,32200,0,0)

($382.55)

Difference in interest (monthly)

382.55-295.99

86.56

Related Questions

Navigate

• Browse (All)
• Browse 5
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.