Question

You can afford payments of $700 per month for the purchase of a house.

a) What is the largest amount you can finance for this house at 3.2% APR for 30 years? (Round to the nearest dollar.) 

b) How much total will you pay the finance company at the end of the 30 years for this house if you are paying $700 per month for thirty years? 

c) Now you are curious what the payments would be if you financed the same amount for a house as in part (a) at 3.2% APR for 20 years instead of 30 years. How much would those monthly payments be if you financed the amount you calculated in part (a) at 3.2% APR for 20 years? (Round to the nearest dollar.) 

d) Using the payments from part (c), how much total will you pay the finance company at the end of 20 years? 

Answer 1

1.
I/Y=3.2%/12
PMT=-700
FV=0
N=12*30
CPT PV=161862.111599741

2.
=700*12*30=252000

3.
I/Y+3.2%/12
N=12*20
PV=-161862.111599741
FV=0
CPT PMT=913.9751796212314

4.
=913.9751796212314*12*20=219354.043109095