Question

6.)

The Jackson family buys a house for $295,000 with a down payment of $57,000.

Consider the Jackson family's purchase of a house described in problem #5. At the end of 12 years the Andersons inherit some money and want to pay the remaining balance on the amortized loan. What would the this remaining balance?

Answer 1

Answer to Question No. 6

The link of Question no. 6 is with question no. 5. The given question is not clear on rate of interest, EMI amount and  tenure of loan . Therefore I have made assumption as follows :

1) Rate of interest : 6% per annum

2) Loan tenure : 15 years

3) Loan installment repayment : Yearly

Now based on above assumption the problem can be solved to find out remaining balance on the amortized loan at the end of 12th year :

Home price : $295,000

Down payment : $57,000

Loan amount : $295,000-$57,000= $238,000

Loan Amount		$238,000
Rate of Interest pa (based on assumption no. 1)		6.00%
Tenure of loan in Years (based on assumption no. 2)		15
No. of Installments (based on assumption no. 3)		15
Yearly repayment calculated based on interest & no. of installments		$24,505

Calculation of interest and outstanding principle based on above :

Amortization table

MONTHS	EMI	INTEREST	PRINCIPAL REPAYMENT	OST PRINCIPAL
0				238000
1	24,505	14280	10225	227775
2	24,505	13666	10839	216936
3	24,505	13016	11489	205447
4	24,505	12327	12178	193269
5	24,505	11596	12909	180360
6	24,505	10822	13684	166676
7	24,505	10001	14505	152172
8	24,505	9130	15375	136797
9	24,505	8208	16297	120500
10	24,505	7230	17275	103225
11	24,505	6193	18312	84913
12	24,505	5095	19410	65503
13	24,505	3930	20575	44928
14	24,505	2696	21809	23118
15	24,505	1387	23118	0

Therefore at the end of 12 years the remaining amount of amortized loan is $ 65,503