Question

apter 7 Homework Saved Help Save Cher Ben and Carla Covington plan to buy a condominium. They will obtain a $229,000, 20-year mortgage at 5.0 percent Their annual property taxes are expected to be $1,550. Property insurance is $630 a year, and the condo association fee is $250 a month Based on these items, determine the total monthly housing payment for the Covingtons. Use Exhibit 7-Z (Round Tour intermediate calculations and final answer to 2 decimal places.) Total monthly housing payment I T

Answer 1

Answer : 1,942.97

Calculation:

To calculate the total monthly housing payment for the Covingtons, the formula is

PMT	=	P*(	r(1+r)^n)	)
			(1+r)^n -1

Here we need to calculate monthly payments. So values to enter in the formula are:

Original principal amount of loan	P	229000
Interest rate per period	r	0.004167	(5%/12)
Number of payments	n	240	(20*12)

PMT=		229000*	0.0041667*(1+0.0041667)^240
			(1+0.0041667)^240 - 1

or we could use the formula in MS excel, that is =PMT(rate,nper,pv) = PMT(0.0041667,240,229000)

= $1,511.30

Other details given in question :

		Per month
Property taxes	1550	129.17
Insurance	630	52.5
Condo association fees	250	250

Calculation of total monthly housing payment :

Monthly Housing Payment
Mortgage	$1,511.30
Property Taxes	$129.17
Insurance	$52.50
Condo Association Fees	$250.00
Total	$1,942.97