Question

In: Finance

Given info Student loan Annual 14667 4 year total 58558 Interest 4.45% Home Buying home in...

Given info

Student loan

Annual 14667

4 year total 58558

Interest 4.45%

Home

Buying home in 7 years which is 4 years after graduation

30 year mortgage fixed interest 4.37%

House is 450kwith 15% downpayment

Cost of living

Utilities monthly

Electric 45

Phone 25

Internet/cable 115

Water 50

Natural gas 120

Gas 350

Food 400

Rent 0

Yearly expenses

Technology 1000

Car maintenance 500

Clothes 1000

Vacation 1000

Bar/clubs 1000

Salary

65k plus 5k for inflation 70k

First, let's compute your monthly (don't forget to modify your interest rate, for monthly compounding!!) debt of the student loan. Your payments will start on September 2022 and nish on September 2032. Please compute your monthly payment (using the assumptions or your real data [amount loaned, interest rate and duration]) and the total interest you will pay.

2. Compute the monthly payment of your house and the total interest you will pay on it. You have until 2025 to get the money for the down payment and you will start paying your mortgage on September 2025 and continue until September 2055. Compute the total interest you will pay.

Expert Solution

Part (1)

Student loan payment Annual 14667

Monthly payment = 14,667 / 12 = 1,222.25

Interest 4.45%; Interest rate per month = 4.45%/12 = 0.0037

Your payments will start on September 2022 and finish on September 2032.

Nper= 10 years = 12 x 10 = 120 months

Present value of loan, L = - PV (Rate, Period, PMT, FV) = - PV(0.0037, 120, 1222.25, 0) = $118,263.84

Total interest payment = Nper x monthly payment - L = 120 x 1,222,25 - $118,263.84 = $28,406.16

Part 2

Home

Buying home in 7 years which is 4 years after graduation

30 year mortgage fixed interest 4.37%

House is 450k with 15% down payment

Amount of loan = 450,000 x (1 - 15%) = $ 382,500

Interest rate per month = 4.37% / 12 = 0.0036

you will start paying your mortgage on September 2025 and continue until September 2055.

Hence, Period = 30 years = 12 x 30 = 360 months

Monthly payment = PMT(Rate, Period, PV, FV) = PMT(0.0036, 360, -382500, 0) = $1,908.64

Hence, total interest payment = Period x PMT - PV = 360 x $1,908.64 - 382,500 = $ 304,609.77

jeff jeffy answered 9 months ago

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