Question

Alexis want to buy a house in 5 years. She wants to save $75,000 over the next five years for a down payment. If she can earn an annual rate of 9% on her savings, how much must she deposit in equal payments at the end of each month for the next five years to reach her goal?

A) $1,250 B) $765.87 C) $994.38 D) $8,420.13

Alexis is ready to buy her house. She will purchase the $450,000 house with her $75,000 down payment and finance the rest with a 20 year, 6% annual rate mortgage with equal end of month payments. What will be her monthly payment?

A) $2,134.76 B) $3,223.94 C) $1,701.69 D) $2,686.62

Answer #1

**Question
1**

**Future value of Annuity = A
[((1+r) ^{n}**

Where

A - Annuity payment = ?

r - rate per period = .09/12 = 0.0075

n - no. of periods = 5*12 = 60

75000 = A* [((1+.0075)^60 -1) / .0075]

= A* [(1.56568102694 -1) / .0075]

= A*(0.56568102694/.0075)

= A*75.4241369253

A = 75000/75.4241369253

**=
$994.38**

**Question
2**

**EMI = [P * I *
(1+I)^N]/[(1+I)^N-1]**

P =loan amount or Principal = 450000-75000 = 375000

I = Interest rate per month = .06/12 =
0.005

N = the number of installments = 20*12 = 240

**EMI
=** [375000*.005*1.005^240]/[1.005^240-1]

= [375000*.005*3.31020447581]/[3.31020447581-1]

= 6206.63339214/2.31020447581

**=
$2,686.62**

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