1. Amortize a $125,000 (Sale Price) house with 20% down payment on a 15 year loan...

1. Amortize a $125,000 (Sale Price) house with 20% down payment on a 15 year loan at 3.0% annual interest rate
	(1) What is the monthly payment?
	(2) What month will the debt be less than $50,000? (Assume that you just took out the loan)
	(3) How much will you pay in interest over the life of the loan?

Solutions

Expert Solution

Loan Amount = 125,000(0.80) = $100,000

Calculating Monthly Payment,

Using TVM Calculation,

PMT = [PV = 100,000, FV = 0, N = 180, I = 0.03/12]

PMT = $690.58

Calculating Time period,

Using TVM Calculation,

N = [Pv = 100,000, PMT = -690.58, FV = 50,000, I = 0.03/12]

N = 100

Time Period = 100 months

Total Interest paid = 180(690.58) - 100,000

Total Interest Paid = $24,304.40

jeff jeffy answered 2 years ago

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