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Susan Carver will purchase a home for $160,000. She will use a down payment of 20%...

Susan Carver will purchase a home for $160,000. She will use a down payment of 20% and finance the remaining portion at 8.4​%, compounded monthly for 15 years. Complete parts​ (a) through​ (c) below.

a) What will be the monthly​ payment?

(b) How much will remain on the loan after making payments for 8 years?

c) What is the total amount paid over the course of 15 years?

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Answer #1

Information provided:

Cost of the house= $160,000

Down payment= 0.20* $160,000= $32,000

Mortgage= present value= $160,000 - $32,000= $128,000

Time= 15 years*12= 180 months

Monthly interest rate= 8.4%/12= 0.70%

a.The monthly mortgage payment is calculated by entering the below in a financial calculator:

PV= -128,000

N= 180

I/Y= 0.70

Press the CPT key and PMT to compute the monthly mortgage payment.

The value obtained is 1,252.97.

Therefore, the monthly mortgage payment is $1,252.97.

b.Amount remining on the loan after making payments for 8 years:

= $128,000 - ($1,252.97*8*12)

= $128,000 - 120,285

= $7,714.88.

c.Total amount paid over the course of 15 years:

= $1,252.97*180

= $225,534.60.

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