The Turners have purchased a house for $180,000. They made an initial down payme

Q: The Turners have purchased a house for $180,000. They made an initial down payme

a. Monthly Payment formula: P = r (PV) / [ 1- (1+r) -n] P = Monthly Payment PV = Present Value = 180000 r = rate per month = 10/12 = 0.833% n = number of months = 360 months Putting Values in the above formula P = $1579.1 Thus, Monthly payment is $1579.1 b. Total Interest = [1579.1 x 360] - 180000 = $388476

ID: 2752824 • Letter: T

Question

The Turners have purchased a house for $180,000. They made an initial down payment of $10,000 and secured a mortgage with interest charged at the rate of 10%/year compounded monthly on the unpaid balance. The loan is to be amortized over 30 yr. (Round your answers to the nearest cent.)

(a) What monthly payment will the Turners be required to make?
$

(b) How much total interest will they pay on the loan?
$

(c) What will be their equity after 10 years?
$

(d) What will be their equity after 22 years?
$

Explanation / Answer

Monthly Payment formula:

P = r (PV) / [ 1- (1+r) -n]

P = Monthly Payment

PV = Present Value = 180000

r = rate per month = 10/12 = 0.833%

n = number of months = 360 months

Putting Values in the above formula

P = $1579.1

Thus, Monthly payment is $1579.1

b. Total Interest = [1579.1 x 360] - 180000

= $388476

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The Turners have purchased a house for $180,000. They made an initial down payme

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The Turners have purchased a house for $180,000. They made an initial down payme

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