Lets say you have purchased a house for $175,000.00. Your interest rate is 5.5%,
ID: 1212416 • Letter: L
Question
Lets say you have purchased a house for $175,000.00. Your interest rate is 5.5%, your put down 25%. It's a fixed 30 year loan. A: How much is your loan for? B: What's your monthly principal and interest payment? C: If you decide to pay an additional $200.00 per month, what impact will this have on the life of the loan? 2: You have a $12,250.00 credit card balance with an annual interest rate of 13.25% A: What is your minimum monthly payment? B: For your next payment: How much is interest? C: How much principal? 3: You just purchased a car for $19,550.00. You put down $3,500.00. You agreed to a four year loan at 4.75% A: How much is your loan for? B: What's your monthly principal and interest payment?Explanation / Answer
1. A Cost of the house = $175,000.00
25% down payment = $175,000 x 0.25 = $43,750
Loan amount = $175,000 - $43,750
Loan amount = $131,250
1. B Interest on $131,250 for 30 years @5.5 percent = $131.250 x 0.055 x 30
Interest for 30 years = $216,562.50
Loan amount plus interest = $131,250 + $216,562.5 = $347,812.5
Monthly principal and interest payment = $347,812.5 / 30x12
Monthly principal and interest payment = $966.15.
1. C. If monthly payment is increased from $966.15 to 1,166.15, ($200 increase)
Number of months the loan payable would be = $347,812.5 / $1,166.5
The loan will be paid off in: 298.25 months
The loan will be paid off early by 24.9 years.
2. A. Minimum monthly payment for credit card on $12,250 credit balance
$12,250 x 0.02
Minimum monthly payment = $245.
2. B. Interest for next payment:
$12,250 x 13.25%
Interest for the next payment = $1623.125 (.13)
2. C. Principal = $13,873.125
3. A. Cost of the car = $19,550.00
Down payment = $3,500
Loan amount = $19,550 - $3,500
Loan amount = $16,050
3. B. Interest on $16,050 for 4 years @ 4.75% = $16,050 x 4 x 4.75%
Interest on $16,050 = $3,049.5
Loan plus interest amount = $19,099.5
Monthly principal and interest payment = $19,099.50 / 4x12
Monthly principal and interest payment = $397.90
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