Show appropriate work, numbers in formulas, etc. se back opage when needed 1. A
ID: 2739486 • Letter: S
Question
Show appropriate work, numbers in formulas, etc. se back opage when needed 1. A family purchases a $ 500,000 house by making a down-payment of $ a suose by making a down-payment of $ 40,000, and finances the ears at an annual rate of 4.8 % compounded balance by making monthly payments for 30 y monthly a) What is the monthly payment? b) Assume the family owns the house for the full 30 vears. What would be the total cost for the house/how much would they end up paying for the house? c) Assume the family owns the house for the full 30 years. At the end of the mortgage, how much interest has been paid? d) After 12 years of ownership p they decide to sel the house for $ 675,000. How much money is owed the lender/bank at the time of the sale?Explanation / Answer
1. Monthly installment caluclation
Net amount = 500,000 - 40,000 = 460,000
no of installments = 30 * 12 = 360
i = 4.8% / 12 = 0.4%
EMI = P * i * (1+i)n / [ (1+i)n - 1 ] = 460,000 * 0.4%% * 1.004360 / [ 1.004360 - 1 ]
= 1840 * 4.20858992551 / 3.20858992551 = 2413.46
2. Total amount that they would pay for the house = 360 * 2413.46 + 40,000 = $ 908,846
3.Total interest that had been padi = 360*2413.46 - 460,000 = $ 408,846
4.
at the end of 12 years balance to be paid = 3,48,624.63
Year Principal(A) Interest
(B) Total Payment
(A + B) Balance 2016 7,034.95 21,926.57 28,961.52 4,52,965.05 2017 7,380.16 21,581.36 28,961.52 4,45,584.89 2018 7,742.30 21,219.22 28,961.52 4,37,842.59 2019 8,122.22 20,839.30 28,961.52 4,29,720.37 2020 8,520.78 20,440.74 28,961.52 4,21,199.59 2021 8,938.89 20,022.63 28,961.52 4,12,260.70 2022 9,377.53 19,583.99 28,961.52 4,02,883.17 2023 9,837.68 19,123.84 28,961.52 3,93,045.49 2024 10,320.42 18,641.10 28,961.52 3,82,725.06 2025 10,826.85 18,134.67 28,961.52 3,71,898.22 2026 11,358.12 17,603.40 28,961.52 3,60,540.09 2027 11,915.47 17,046.05 28,961.52 3,48,624.63