3-1\\ You plan to purchase a $150,000 house using a 15-year mortgage obtained fr

Question

3-1 You plan to purchase a $150,000 house using a 15-year mortgage obtained from your local credit union. The mortgage rate offered to you is 5 percent. You will make a down payment of 15 percent of the purchase price. a. Calculate your monthly payments on this mortgage. (Do not round intermediate calculations. Round your answer to 2 decimal places. (e.g., 32.16)) Monthly payment $ b. Calculate the amount of interest and, separately, principal paid in the 25th payment. (Do not round intermediate calculations. Round your answers to 2 decimal places. (e.g., 32.16)) Amount of interest $ Amount of principal $ c. Calculate the amount of interest and, separately, principal paid in the 140th payment. (Do not round intermediate calculations. Round your answers to 2 decimal places. (e.g., 32.16)) Amount of interest $ Amount of principal $ d. Calculate the amount of interest paid over the life of this mortgage. (Do not round intermediate calculations. Round your answer to 2 decimal places. (e.g., 32.16)) Amount of interest paid $

Explanation / Answer

a

monthly payment

Loan amount = 150000* 85% = 127500

b

c

d

*Hope the above explanation helps, please comment if further explanation is required. Your rating is appreciated*

Monthly payment = [P * R * (1+R)^N ] / [(1+R)^N -1] Using the formula: Principle P                                                       1,27,500.00 Rate of interest per period: Annual rate of interest 5.000% Frequency of payment = Once in 1 month period Numer of payments in a year = 12/1 = 12 Rate of interest per period R 0.05 /12 = 0.4167% Total number of payments: Frequency of payment = Once in 1 month period Number of years of loan repayment =                                                                        15 Total number of payments N 15*12 = 180 Period payment using the formula = [ 127500*0.00417*(1+0.00417)^180] / [(1+0.00417 ^180 -1] Monthly payment = 1,008.26

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