Question

2. Ted and Jane are buying a house for $280,000. They will make a 25% down payment. They will be able to obtain a loan at 8.5% per annum interest. What will be their annual payment if their loan is for 15 years? 25 years? What will be the monthly payment if their loan is for 15 years? 30 years?

The correct answers are below, I just need to know how to solve using a financial calculator

2. 25,288.3, 20,519.45, 2,067.95, 1,614.72

Answer 1

Cost of house = $280,000

Down payment = 25% * $280,000
Down payment = $70,000

Amount borrowed = Cost of house - Down payment
Amount borrowed = $280,000 - $70,000
Amount borrowed = $210,000

Case A:

Annual interest rate = 8.50%
Period = 15 years

Using financial calculator:
N = 15
I = 8.50%
PV = 210000
FV = 0

PMT = -25288.30

Annual payment = $25,288.30

Case B:

Annual interest rate = 8.50%
Period = 25 years

Using financial calculator:
N = 25
I = 8.50%
PV = 210000
FV = 0

PMT = -20519.45

Annual payment = $20,519.45

Case C:

Annual interest rate = 8.50%
Monthly interest rate = 0.70833%
Period = 15 years or 180 months

Using financial calculator:
N = 180
I = 0.70833%
PV = 210000
FV = 0

PMT = -2067.95

Monthly payment = $2,067.95

Case D:

Annual interest rate = 8.50%
Monthly interest rate = 0.70833%
Period = 30 years or 360 months

Using financial calculator:
N = 360
I = 0.70833%
PV = 210000
FV = 0

PMT = -1614.72

Monthly payment = $1,614.72