In: Finance
The MacDonalds are at the bank in order to negotiate a loan to buy a farm where they can raise cows, horses, chickens sheep and plant spaghetti trees. They have managed to save $400,000 over the last 10 years that they can use as a down payment. The MacDonalds would like to finance their purchase over 25 years making monthly payments. According to their financial planning schedule, they will clear $7,500 a month and would like their mortgage payments to be at most 30 percent of their monthly earnings. The bank is offering a 25 year amortized mortgage loan at 5.25 percent with a 5 year term.
1.
=7500*30%/(5.25%/12)*(1-1/(1+5.25%/12)^(12*25))+400000=$775,470.77
2.
Payment | Loan beginning balance | Payment | Interest payment | Principal payment | Loan ending balance |
1 | 375470.77 | $2,250.00 | $1,642.68 | $607.32 | $374,863.45 |
2 | $374,863.45 | $2,250.00 | $1,640.03 | $609.97 | $374,253.48 |
3 | $374,253.48 | $2,250.00 | $1,637.36 | $612.64 | $373,640.84 |
4 | $373,640.84 | $2,250.00 | $1,634.68 | $615.32 | $373,025.52 |
5 | $373,025.52 | $2,250.00 | $1,631.99 | $618.01 | $372,407.51 |
6 | $372,407.51 | $2,250.00 | $1,629.28 | $620.72 | $371,786.79 |
7 | $371,786.79 | $2,250.00 | $1,626.57 | $623.43 | $371,163.36 |
8 | $371,163.36 | $2,250.00 | $1,623.84 | $626.16 | $370,537.20 |
9 | $370,537.20 | $2,250.00 | $1,621.10 | $628.90 | $369,908.30 |
10 | $369,908.30 | $2,250.00 | $1,618.35 | $631.65 | $369,276.65 |
11 | $369,276.65 | $2,250.00 | $1,615.59 | $634.41 | $368,642.23 |
12 | $368,642.23 | $2,250.00 | $1,612.81 | $637.19 | $368,005.04 |
13 | $368,005.04 | $2,250.00 | $1,610.02 | $639.98 | $367,365.06 |
14 | $367,365.06 | $2,250.00 | $1,607.22 | $642.78 | $366,722.28 |
15 | $366,722.28 | $2,250.00 | $1,604.41 | $645.59 | $366,076.69 |
16 | $366,076.69 | $2,250.00 | $1,601.59 | $648.41 | $365,428.28 |
17 | $365,428.28 | $2,250.00 | $1,598.75 | $651.25 | $364,777.03 |
18 | $364,777.03 | $2,250.00 | $1,595.90 | $654.10 | $364,122.93 |
19 | $364,122.93 | $2,250.00 | $1,593.04 | $656.96 | $363,465.97 |
20 | $363,465.97 | $2,250.00 | $1,590.16 | $659.84 | $362,806.13 |
21 | $362,806.13 | $2,250.00 | $1,587.28 | $662.72 | $362,143.41 |
22 | $362,143.41 | $2,250.00 | $1,584.38 | $665.62 | $361,477.78 |
23 | $361,477.78 | $2,250.00 | $1,581.47 | $668.53 | $360,809.25 |
24 | $360,809.25 | $2,250.00 | $1,578.54 | $671.46 | $360,137.79 |
25 | $360,137.79 | $2,250.00 | $1,575.60 | $674.40 | $359,463.39 |
26 | $359,463.39 | $2,250.00 | $1,572.65 | $677.35 | $358,786.04 |
27 | $358,786.04 | $2,250.00 | $1,569.69 | $680.31 | $358,105.73 |
28 | $358,105.73 | $2,250.00 | $1,566.71 | $683.29 | $357,422.45 |
29 | $357,422.45 | $2,250.00 | $1,563.72 | $686.28 | $356,736.17 |
30 | $356,736.17 | $2,250.00 | $1,560.72 | $689.28 | $356,046.89 |
31 | $356,046.89 | $2,250.00 | $1,557.71 | $692.29 | $355,354.60 |
32 | $355,354.60 | $2,250.00 | $1,554.68 | $695.32 | $354,659.27 |
33 | $354,659.27 | $2,250.00 | $1,551.63 | $698.37 | $353,960.91 |
34 | $353,960.91 | $2,250.00 | $1,548.58 | $701.42 | $353,259.48 |
35 | $353,259.48 | $2,250.00 | $1,545.51 | $704.49 | $352,555.00 |
36 | $352,555.00 | $2,250.00 | $1,542.43 | $707.57 | $351,847.42 |
37 | $351,847.42 | $2,250.00 | $1,539.33 | $710.67 | $351,136.76 |
38 | $351,136.76 | $2,250.00 | $1,536.22 | $713.78 | $350,422.98 |
39 | $350,422.98 | $2,250.00 | $1,533.10 | $716.90 | $349,706.08 |
40 | $349,706.08 | $2,250.00 | $1,529.96 | $720.04 | $348,986.04 |
41 | $348,986.04 | $2,250.00 | $1,526.81 | $723.19 | $348,262.86 |
42 | $348,262.86 | $2,250.00 | $1,523.65 | $726.35 | $347,536.51 |
43 | $347,536.51 | $2,250.00 | $1,520.47 | $729.53 | $346,806.98 |
44 | $346,806.98 | $2,250.00 | $1,517.28 | $732.72 | $346,074.26 |
45 | $346,074.26 | $2,250.00 | $1,514.07 | $735.93 | $345,338.34 |
46 | $345,338.34 | $2,250.00 | $1,510.86 | $739.14 | $344,599.19 |
47 | $344,599.19 | $2,250.00 | $1,507.62 | $742.38 | $343,856.81 |
48 | $343,856.81 | $2,250.00 | $1,504.37 | $745.63 | $343,111.19 |
49 | $343,111.19 | $2,250.00 | $1,501.11 | $748.89 | $342,362.30 |
50 | $342,362.30 | $2,250.00 | $1,497.84 | $752.16 | $341,610.13 |
51 | $341,610.13 | $2,250.00 | $1,494.54 | $755.46 | $340,854.68 |
52 | $340,854.68 | $2,250.00 | $1,491.24 | $758.76 | $340,095.92 |
53 | $340,095.92 | $2,250.00 | $1,487.92 | $762.08 | $339,333.83 |
54 | $339,333.83 | $2,250.00 | $1,484.59 | $765.41 | $338,568.42 |
55 | $338,568.42 | $2,250.00 | $1,481.24 | $768.76 | $337,799.66 |
56 | $337,799.66 | $2,250.00 | $1,477.87 | $772.13 | $337,027.53 |
57 | $337,027.53 | $2,250.00 | $1,474.50 | $775.50 | $336,252.03 |
58 | $336,252.03 | $2,250.00 | $1,471.10 | $778.90 | $335,473.13 |
59 | $335,473.13 | $2,250.00 | $1,467.69 | $782.31 | $334,690.82 |
60 | $334,690.82 | $2,250.00 | $1,464.27 | $785.73 | $333,905.10 |
3.
333905.10