Assume you borrow $100,000 from a bank to buy a house at 7% interest for 30 year

Question

Assume you borrow $100,000 from a bank to buy a house at 7% interest for 30 years with monthly payments. How much do you need to pay every month? And how much interest will you pay to the bank during year 4 only?

   A.  
monthly payments = approx. $665 ;

interest payment in year4 = $6,731

   B.  
monthly payments = approx. $299 ;

interest payment in year4 = $6,731

   C.  
monthly payments = approx. $1265 ;

interest payment in year4 = $6,731

   D.  
monthly payments = approx. $765 ;

interest payment in year4 = $6,974

   E.  
monthly payments = approx. $665 ;

interest payment in year4 = $6,974

Explanation / Answer

95,475

hence from the above we can see that total interest paid only 4th year is $6731. And monthly installment is $665.

so answere is (A)

monthly payments = approx. $665 ;

interest payment in year4 = $6,731

Month Beginning Balance Principal Interest Payment Ending Balance 1 $100,000 $82 $583 $665 $99,918 2 99,918 82 583 665 99,836 3 99,836 83 582 665 99,753 4 99,753 83 582 665 99,669 5 99,669 84 581 665 99,585 6 99,585 84 581 665 99,501 7 99,501 85 580 665 99,416 8 99,416 85 580 665 99,331 9 99,331 86 579 665 99,245 10 99,245 86 579 665 99,158 11 99,158 87 578 665 99,072 12 99,072 87 578 665 98,984 13 98,984 88 577 665 98,896 14 98,896 88 577 665 98,808 15 98,808 89 576 665 98,719 16 98,719 89 576 665 98,630 17 98,630 90 575 665 98,540 18 98,540 90 575 665 98,449 19 98,449 91 574 665 98,358 20 98,358 92 574 665 98,267 21 98,267 92 573 665 98,174 22 98,174 93 573 665 98,082 23 98,082 93 572 665 97,989 24 97,989 94 572 665 97,895 25 97,895 94 571 665 97,801 26 97,801 95 571 665 97,706 27 97,706 95 570 665 97,611 28 97,611 96 569 665 97,515 29 97,515 96 569 665 97,418 30 97,418 97 568 665 97,321 31 97,321 98 568 665 97,224 32 97,224 98 567 665 97,125 33 97,125 99 567 665 97,027 34 97,027 99 566 665 96,927 35 96,927 100 565 665 96,827 36 96,827 100 565 665 96,727 37 96,727 101 564 665 96,626 38 96,626 102 564 665 96,524 39 96,524 102 563 665 96,422 40 96,422 103 562 665 96,319 41 96,319 103 562 665 96,216 42 96,216 104 561 665 96,112 43 96,112 105 561 665 96,007 44 96,007 105 560 665 95,902 45 95,902 106 559 665 95,796 46 95,796 106 559 665 95,689 47 95,689 107 558 665 95,582 48 95,582 108 558 665

95,475

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