Question

1. Suppose you bought a house and you borrowed $355,000 for 360 months at a fixed 0.302% monthly interest rate (you have an actuarial loan).

   1. (a) What is your initial loan payment?

   2. (b) After 159 months (and therefore 159 payments), how many payments

      remain?

   3. (c) After 159 payments, what is your loan balance?

   4. (d) After 159 payments, by how much has your initial loan balance fallen?

   5. (e) After 159 payments, how much interest have you paid so far?

Answer 1

Loan amount = $ 355,000, time, n = 360 months

Interest, i = 0.302℅ per month

a. Let us assume you pay $ A each month.

Monthly payment = $ 1,618.78

b. Number of payments left to be paid = 360 - 159 = 201

c. Loan balance after 159 payments

D. Amount paid after 159th payment

= $ 355,000 - 243,636.4

= $ 111,363.54

E. Total payment in 159 months = $ 1,618.78 ×159

= $ 257,386.02

Total principal paid = $ 111,363.54

Interest paid = 257,386.02 - 111,363.54 = $ 146,022.48

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