This problem is a complex financial problem that requires several skills, perhaps some from previous sections....

This problem is a complex financial problem that requires several skills, perhaps some from previous sections. Clark and Lana take a 30-year home mortgage of $124,000 at 7.2%, compounded monthly. They make their regular monthly payments for 5 years, then decide to pay $1000 per month. (a) Find their regular monthly payment. (Round your answer to the nearest cent.)

(b) Find the unpaid balance when they begin paying the $1000. (Round your answer to the nearest cent.)

(c) How many payments of $1000 will it take to pay off the loan? Give the answer correct to two decimal places.
monthly payments

(d) Use your answer to part (c) to find how much interest they save by paying the loan this way. (Round your answer to the nearest cent.)

Expert Solution

	Loan amount	124000.00
	Tenure in years	30
	Rate	7.20%

a	Regular monthly payment	$841.70

b	Principal paid in 5 years	-7030.77
	Unpaid balance	116969.23

c	Number of payments required	202.28

d	Total payments in regular method	252509.21
	Total payments in $1000 method	202278.17
	Interest saved	50231.04

Workings

jeff jeffy answered 6 months ago

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This problem is a complex financial problem that requires several skills, perhaps some from previous sections....

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