10. A mortgage loan is made for $125,000 at 7% interest for 20 years. What is th
ID: 2809635 • Letter: 1
Question
10. A mortgage loan is made for $125,000 at 7% interest for 20 years. What is the monthly payment? PMT $969.12 What will be the total of payments for the entire 20 year period? Of this total, how much will be interest? Total- $232,590 Interest S107,590 a A borrower obtains a mortgage loan for S85,000 at 10% interest for is years, what is the monthly payment on the loan? What is the dollar amount of the interest payment for the first month of the loan? What is the dollar amount of the principal payment for the first month of the loan? 2os o8 70) , 33 913.103 33 11. A couple purchases a home for $250,000. In order to finance his purchase, they secure an 80% loan to value ratio loan for fifteen years at 7% interest. what is the monthly payment? what is the loan balance after seven (7) years? pmt $1797.66 balance -$131,853.73 a. A couple purchases a home for $400,000. In order to finance this purchase, they secure an 80% loan to value ratio loan for fifteen years at 5% interest what is the monthly payment? what is the loan balance after five (5) years?Explanation / Answer
10)
loan amount , L = $125,000
interest rate , i = 7% = 0.07
monthly interest rate , r = i/12 = 7/12 = 0.583333% = 0.00583333
period of loan , m = 20 years
no. of monthly payments to be made , n = m*12 = 20*12 = 240
monthly payment = M = L/PVIFA( 0.583333%, 240)
where PVIFA = present value interest rate factor of annuity
PVIFA(0.583333%,240 ) =[ (1+r)n -1]/((1+r)n *r)
= [ (1.00583333)240 -1]/((1.00583333)240 *0.00583333) = 128.9825464
M = 125,000/128.9825464 = $969.12337
total payments for entire 20 years, T = M*n = 969.12337*240 = 232,589.61 or 232,590 ( after rounding off)
interest = T - L = 232,590 - 125,000 = $107,590
a)
loan amount , L = $85,000
interest rate , i = 10% = 0.10
monthly interest rate , r = i/12 = 10/12 = 0.83333% = 0.0083333
period of loan , m = 15 years
no. of monthly payments to be made , n = m*12 = 15*12 = 180
monthly payment = M = L/PVIFA( 0.83333%, 180)
where PVIFA = present value interest rate factor of annuity
PVIFA(0.83333%,180 ) =[ (1+r)n -1]/((1+r)n *r)
= [ (1.0083333)180 -1]/((1.0083333)180 *0.0083333) = 93.05765073
M = 85,000/93.05765073 = $913.4123 or $913.41 ( after rounding off)
dollar value of interest for first month, x = r*L = 0.0083333*85000 = $708.33
dollar value of principal for first month = M - x = 913.41 -708.33 = $205.08
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