Question

A recent college graduate borrows $100,000 at an interest rate of 7% to purchase a condominium. Anticipating steady salary increases, the buyer expects to make payments at a monthly rate of 700(1+t120), where t is the number of months since the loan was made.

(a) Assuming that this payment schedule can be maintained, when will the loan be fully paid?

The loan will be paid off in

years. (Round your answer to two decimal places.)

(b) Assuming the same payment schedule, how large a loan could be paid off in exactly 21 years?

Loan amount that could be paid off in exactly 21 years = $

(Round your answer to two decimal places.)

Answer 1