Question

Edit question Willie and Stephanie each have $4000 disposal money to invest and use for house payments. they both buy a $400,000, they both put $100,000 down payment on them, they both have a 4.5% APR loan. Willie spends his whole $4000 a month on the house, and when the house is paid off he puts the 4000 a month into a annuity at 6% APR. Stephanie gets a 30 year loan, makes her standard amortized payments , used the remainder of her 4000 to invest into her annuity at 6% APR.

how much will his stack of money be in 30 years?

Answer 1

	Cost of house	$400,000
	Down payment	$100,000
	Loan amount	$300,000
	Number of years of loan	30
	Number of months	360	(30*12)
	Loan interest (APR)	4.50%
	Monthly interest=(4.5/12)%
	Monthly Payment required	$1,520	(Using PMT function of excel with Rate=(4.5/12)%, Nper=360, PV=-300000)
	Savings of Willie:
	Monthly loan repayment	$4,000
	Number of months of payment required	88.23	(Using NPER function of excel with Rate=(4.5/12)%, Pmt=4000, PV=-300000)
	Number of months of saving at $4000 per month	271.77	(360-88.23)
	Interest rate on saving=6% APR
	Monthly interest =6/12=0.5%	0.50%
	Monthly amountof saving	$4,000
	Future value of savings	$2,302,857	(Using FV function of excel with Rate=0.5%,Nper=271.77 Pmt=-4000)
	Saving of Stephanie
	Amount of Loan repayment	$1,520
	Amount available	$4,000
	Amount of monthly investment	$2,480	(4000-1520)
	Number of months of investment	360
	Monthly interest	0.50%
	Future value of savings	$2,491,141	(Using FV function of excel with Rate=0.5%,Nper=360.77 Pmt=-2480)
		Willie	Stephens
	Amount of savings after 30 years	$2,302,857	$2,491,141