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ID: 2810542 • Letter: I
Question
iRoal Portal e Sign I r Sqn Up Chegg, x M 1 box (110) fr 12ul@g ci × M Your Cl egg o m Reset Pass × CSePub Deci nic Publishi X e Chegg 5tudy Guiced 501 t C https://www.csepub.com/exercise/users answers/8991823/edit CSePub Home Book Store Independent Authors About Your Cart tems:Total: $99.99 View Cart A couple took out a 30-year mangage 10 years ago. At that time, the mortgage was $301,100.00 with 8.76% APR and monthly compounding of interest. Today, the couple has been ottered 5327,600.00 tor their house. If the couple accepts the ofter, how much cash will they take trom the deal? The cash will be the ditterence between the sell price and what is owed on the loan Answer Format: Currency: Round to: 2 decimal places. Enter Answer Here Submit Answer + Prev Problem Al ProblemsNext Problem Contact Us Privacy Policy TeTIs Copyright 2018 Conley Smith Publishing. All Right reserved. O Type here to search 1021 PM 9/26/2018 2Explanation / Answer
Solution-
Mortgage period =30 years
No. Of months of repayment = 30*12=360 months
Present value of annuity = $3,01,100
Rate of interest = 8.76% compounded monthly
Monthly interest =8.76/12=0.73%
Calculation of monthly loan payment(P):
Present value of annuity= P*[{1-(1+r)^-n}/r]
3,01,100=P*[{1-(1+0.0073)^-360}/0.0073
3,01,100= P*127
P=3,01,100/127=$2370.87
Monthly loan payment = $2370.87
Calculation of outstanding loan balance at the end of 10th year
Present value of annuity = P*[{1-(1+r)^-n}/r]
P= $2370.87
r=0.73%
n=30-10 = 20 years = 240 months
Present value of annuity = $2370.87*[{1-(1+0.0073)^-240}/0.0073]
Present value of annuity = $2370.87*113.09=$2,68,121.69
Outstanding balance of loan after 10 years =$2,68,121.69
Offered amount =$3,27,600
Amount of cash taken by the couple from the deal = sell price - outstanding balance of loan after 10 yrs
Amount of cash taken by the couple from deal = $3,27,600 - $2,68,121.69=$56,478.31
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