Question

#1) On June 1, you borrowed $195,000 to buy a house. The mortgage rate is 5.20 percent. The loan is to be repaid in equal monthly payments over 15 years. How much of the first payment applies to the principal balance? $714.43 $722.50 $717.51 $756.70 $658.56

#13) You want to borrow $34,800 and can afford monthly payments of $960 for 48 months, but no more. Assume monthly compounding. What is the highest APR rate you can afford?

13.18 percent

14.52 percent

9.24 percent

13.67 percent

14.82 percent

Answer 1

1)	$717.51
Working:
Monthly repayment	=	=pmt(rate,nper,-pv)
	=	$   1,562.44
Where,
rate		5.20%/12	=	0.0043333
nper		15*12	=	180
pv			=	$ 1,95,000
Interest expense	=	Loan amount * Monthly interest rate
	=	$   1,95,000	*	0.0043333
	=	$       845.00
First month payment applied to principal balance			=	Monthly repayment	-	Interest expense
			=	$ 1,562.44	-	$ 845.00
			=	$     717.44
Difference of $ 0.07 is due to rounding off difference.
2)	14.52%
Working:
APR	=	=rate(nper,pmt,-pv)*12
	=	14.52%
Where,
nper		48
pmt		$             960
pv		$       34,800