Question

Suppose you want to borrow $105,000 and you find a bank offering a 20-year loan with an APR of 6%. a. Find your regular payments if you pay n=1, 12, 26, 52 times a year. b. Compute the total payout for each of the loans in part (a). c. Compare the total payouts computed in part (b). a. The payment for n=1 would be $ The payment for n= 12 would be $ The payment for n 26 would be $ The payment for n = 52 would be $

Answer 1

Soini Given that: Principal payment (P) = 105000 6% APR = 0.06 Total year 20 i ! Where The Formula used to calculate monthly payment ( PMIS [1- (1+ Apelny ] y=20 yeane APR 0.062 For n= e payment in PMT= 10 5000 x0.06 $ 9154.378/ tam (i- (1 +0.06)-20) For n=12, payment is a 105000 x C oja pmo= $ 752.253 AM )*20*12) For ns26 ni PMI 105000x C $ 346.952ltan 0.06 12 (1-cit 0.06 payment in 0.06 6) 26 CI-Clt 0.06 ) *20*26) 26 For n=52, е payment is losooo X O-06 52 pм Т = ( 6) CI- CH 00 - 20452 *) 1$ 173.424 9 Am

b Total payouts Total - PMT X ny Ans. For n=1 9154.378 xix20 = $183087.56 Am For n = 12: 752.253 * 12*20 = $ 180540.72 For n=26: 346.952 * 26 *20 = $ 180415.04 Ans For n = 52: 173.41248 52*20 = $ 180 360.96 in smaller total © © The Frequency of payment from part(b) in frequently increasing (n=1, 12,26,52) of the no. of payseet deereases. More Frequent payments revest paid. from part (6). ( ( ( ċ Askof any doub ebt amount