Loan Amortization Problem Number of letters in full name = 19 Now assume that yo

Question

Loan Amortization Problem Number of letters in full name = 19 Now assume that your annual salary = (19) x $32,000 and that the bank you want to borrow from, has determined that it will lend you, loan amount= your annual salary x 2.5 rate number ofletters in your full name x 0 ber of letters Assume that you will borrow for 20 years and you will make monthly payments at the end of each month. A) Calculate your monthly payment (Type your calculator inputs, ie. N=: PV= and so on) Please indicate these values and calculate = interest rate = PMT =

Explanation / Answer

Annual Salary(19 x 32000) 32000 Loan Amount 80000 Terms 20 years Answer A. Interest rate (19 x 0.7%) 13.3 n=20 x 12x=x240 PV = 80,000. PMT = 80000 x (13.3/1200 x (1+13.3/1200)^240)/(((1+13.3/1200)^240)-1) =80000 x( 1.000110833 x (1.000110833^240))/((1.000110833^240)-1) =80000 x 0.011930125 = $954.41 Answer B Total Payment (954.41 x 240) 229058.4 Less Loan Repayment 80000 Interest Payment over the life 149058.4 Answer C. In this cas loan amount will be 80000 x 0.8 = 64000 So PMT = 64000 x 0.011930125 763.528 Total Payment (763528 * 240) 183246.7 Less Loan Repayment 64000 Interest Payment over the life 119246.7 Lesser Interest payment 29811.68 Answer D Month Beginning Payment Interest pay Principal pay Ending 1 80000 954.41 886.67 67.74 79932.26 2 79932.26 954.41 885.92 68.49 79863.76 3 79863.76 955.41 885.16 70.25 79793.51 4 79793.51 956.41 884.38 72.03 79721.48 5 79721.48 957.41 883.58 73.83 79647.65

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