Question

. A couple bought a house for $200,000 with 5% down and a 30 year mortgage with an interest rate of 6% a year. What were the monthly payments? 5 points

How much interest will be paid on the loan over the first 5 years of the loan? 5 points

How much interest will be paid on the loan over the last 5 years of the loan? 5 points

Why the difference in the two amounts? 5 points

The house depreciated at a rate of -0.2% a month.

What will be its value 7 years after it was purchased?   5 points  

How much equity will there be at the end of the 7 years? 5 points   Explain what happened. 5 points

BAII PLUS CALCULATOR

Answer 1

1.
Monthly payments
PV=-200000*(1-5%)
N=12*30
I/Y=6%/12
FV=0
CPT PMT=1139.15

2.
Loan outstanding after 5 years
PMT=1139.15
PV=-200000*(1-5%)
N=12*5
I/Y=6%/12
CPT FV=176803.28

Loan principal paid=200000*(1-5%)-176803.28=13196.72

Interest paid=1139.15*12*5-13196.72=55152.28

3.
Loan oustanding after 25 years
PMT=1139.15
PV=-200000*(1-5%)
N=12*25
I/Y=6%/12
CPT FV=58922.97

Loan principal paid during last 5 years=58922.97

Interest paid=1139.15*12*5-58922.97=9426.03

4.
The difference occurs because interest gradully declines as oustanding balance declines and gradullay higher payment goes to principal and lesser twowards interest

Apologies but I am forbidden to answer more than 4 questions