Question

1. You are about to buy a home; the purchase price of the car is $200,000 and you are paying 10% of that amount as a down payment and financing the remainder. Your mortgage loan terms are 30 years of monthly payments at an annual rate of 3.25%.

1. How much are your monthly mortgage payments?
2. Over the life of the loan, how much did you pay in interest

a) Suppose on January 1 you deposit $2,750 in an account that pays a quoted interest rate of 2.35% (APR), with interest added (compounded) daily. How much will you have in your account on October 1, or after 9 months? (assume N = 273 days) Recall that the interest rate (I/Y) represents the periodic rate based on how many times per YEAR the interest is compounded. Hint, this is 365 times per year. As above, and all TVM type problems, there should be no interim rounding of the interest rates.

b) Now suppose you leave your money in the bank for 21 months. Thus, on January 1 you deposit $2,750 in an account that pays an APR of 2.35% compounded daily. How much will be in your account on October 1 of the following year? (assume N = 638 days)

Answer 1

purchase price of house = $200,000

loan amount = 200,000 * 90%

principal amount (P) = $180,000

time (n)= 30 years that is 30*12 which is 360 months

interest = 3.25% or 0.0325

interest per month (i) = 0.0325/12 which is 0.0027

Amount per month to be paid (a) = ?