4.If you purchase a house today for $175,000, what will be your mortgage payment if you...
4.If you purchase a house today for $175,000, what will be your mortgage payment if you paid 15% down and borrowed the balance for 30 years at 9% compounded monthly?
- A) $1,408
- B) $1,419
- C) $1,207
- D) $1,197
Homework Answers
- D) $1,197
| Monthly payment | = | Loan amount | / | Present value of annuity of 1 | |||||
| = | $ 1,48,750 | / | 124.2819 | ||||||
| = | $ 1,197 | ||||||||
| Working; | |||||||||
| Present value of annuity of 1 | = | (1-(1+i)^-n)/i | Where, | ||||||
| = | 124.2818657 | i | = | 9%/12 | = | 0.0075 | |||
| n | = | 30*12 | = | 360 | |||||
| Loan amount | = | Cost of house | - | Down Payment | |||||
| = | $ 1,75,000 | - | (175000*15%) | ||||||
| = | $ 1,75,000 | - | $ 26,250 | ||||||
| = | $ 1,48,750 | ||||||||
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