Karen bought an apartment, with 480,000$ down-payment and 1,120,000$ loan. She needs to pay the loan...

Karen bought an apartment, with 480,000$ down-payment and 1,120,000$ loan. She needs to pay the loan in 15 years with equal repayment each month. The interest is 6% annually (for easy calculation, the interest is 0.5% monthly). i. How much should she pay every month? ii. For the first three months, list the principal and interest she needs to pay. (list for each month in the first three months)

Expert Solution

i)

Loan = 1120000

i = 6%/12 = 0.5% per month

t = 15 * 12 = 180 months

Monthly loan payment = 1120000 * (A/P,0.5%,180)

= 1120000 * 0.005*((1 + 0.005)^180)/((1 + 0.005)^180-1)

= 1120000 * 0.005*((1.005)^180)/((1.005)^180-1)

= 1120000 * 0.008438568

= 9451.196 ~ 9451.20

ii)

Total cost	1600000
Down Payment	480000
Amount of loan	1120000
interest rate	6.00%
time (yrs)	15
Monthly payment	9,451.20

Month	Beginning Balance	Monthly Payment	Monthly Interest	Principle Amount	Ending Balance
1	1120000	9,451.20	1120000*0.005 = 5,600.00	9451.20-5600 = 3,851.20	1120000-3851.20 = 11,16,148.80
2	11,16,148.80	9,451.20	1116148.80*0.005 = 5,580.74	9451.20-5580.74 = 3,870.45	1116148.80-3870.45 = 11,12,278.35
3	11,12,278.35	9,451.20	1112278.35*0.005 = 5,561.39	9451.20-5561.39 = 3,889.80	1112278.35-3889.80 = 11,08,388.55

Rahul Sunny answered 2 years ago

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