Question

The problem describes a debt to be amortized. (Round your answers to the nearest cent.)

A man buys a house for $350,000. He makes a $150,000 down payment and amortizes the rest of the purchase price with semiannual payments over the next 13 years. The interest rate on the debt is 9%, compounded semiannually.

(a) Find the size of each payment.
$  

(b) Find the total amount paid for the purchase.
$  

(c) Find the total interest paid over the life of the loan.
$

Answer 1

Req a:
Cost of house				350000
Less: Downpayment made				150000
Loan borrowed				200,000
Semi annual payments				26
Rate of interest				9%
Semi Annual rate				4.50%
Annuity present value factor (i=4.5% n=26)				15.1466
Instalment amount				13204.28347
Size of each payment: $ 13204
Rreq b:
Total amount paid for purchase of house
Downpayment made				150000
Add: 26 payments of $13204 each				343304
Total amount paid for purchase of house				493304
Req c:
Total Interest paid over loan:
26 payments of 13204 each				343304
Amount borrowed				200000
Total Interest paid over loan:				143304