This problem is·complex financial problem that requires severai skins, perhaps s
ID: 3147619 • Letter: T
Question
This problem is·complex financial problem that requires severai skins, perhaps some from previous sections. aark and Lana take a 30 year home mortgage of$125,000 at 7.9%, eon pounded moreNy. They ale ther reglar monthly pn eno for S yw, en dede be er soo th (a) Find their regular monthly payment. (Round your answer to the nearest cent.) (b) Find the unpaid balance when they begin paying the $1000. (Round your answer to the nearest cent) 118727.9 (e) How many payments of $1000 w take to pay off the loan? (Round your answer to two decimal places) 23189 monthily payments (d) How much ineerest wa they save by paying th·loan-ng the number of payments from part(c), (Rond your answer to the nearest dere.)Explanation / Answer
(a)
It is an EMI calculation problem.
The mathematical formula for calculating EMIs is:
EMI = [P x R x (1+R)^N]/[(1+R)^N-1],
where P stands for the loan amount or principal = 125000
R is the interest rate per month = 7.9%/12 monthly = 0.006583
N is the number of monthly instalments = 30*12 = 360
EMI = [125000 x 0.006583 x (1+0.006583)^260]/[(1+0.006583)^360-1] = $908.51
(b)
118727.9
(c)
New EMI period = 231.89
(d)
loan paid in case 1 (when emi of 908.51 was continued) = 300*908.51 = $272,552.03
loan paid in case 2 (when emi of 1000 was paid) = 231.89*1000 = $231,890
Difference = $40,662.03
so saving of $40,662.03
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