Mr. Bill S.Preston purchased a new house for $80,000. He paid $20,000 upfront on the down...

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Mr. Bill S.Preston purchased a new house for $80,000. He paid $20,000 upfront on the down payment and agreed to pay the rest

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Answer 1

Answer #1

1) If the cost is 80000 and the sown payment in 20000, then the loan amount is 60000

We are given the following information:

r	7.00%
n	25
frequency	1 (Annual)
PV or the loan amount	$ 60,000.00

We need to solve the following equation to arrive at the required annual payment or PMT:

PV = PMT x 1-(1+r)-n 60000 = PMT X- 1- (1 + 0.07)-25 0.07 PMT = 5148.63

So the annual PMT is $60000

Following will be the amortization schedule:

s[ $ ཀྱི་ལག་བག་ཁ| །གཀ|གཟ|གལ| | |ཝ། ཁ་ཟས་ Year Opening Balance PMT Interest Principal repayment Closing Balance ༔ 60,000.00 1|

Opening balance = previous year's closing balance
Closing balance = Opening balance+Loan-Principal repayment
PMT is calculated as per the above formula
Interest = 0.07 x opening balance
Principal repayment = PMT - Interest

Below is the graph of interest and principal components of the annual payments:

6000 5000 4000 3000 2000 1000 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Interest Value Principal repe

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Answer 2

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