Question

Nancy Karnes bought a home for $143,000 with a down payment of $15,000. Her rate of interest is 9% for 35 years. Calculate her:

A. Monthly payment
B. First payment broken down into interest and principal (Round your answers to the nearest cent.)
C. Balance of mortgage at end of month

A.	Monthly payment
B.	First payment:
	interest
	principal
C.	Balance of mortgage

Answer 1

A

loan amount = price-down = 143000-15000 = 128000

PVOrdinary Annuity = C*[(1-(1+i/100)^(-n))/(i/100)]

C = Cash flow per period

i = interest rate

n = number of payments

128000= Cash Flow*((1-(1+ 9/1200)^(-35*12))/(9/1200))

Cash Flow = 1003.51 = monthly payment

	Monthly rate(M)=	yearly rate/12=	0.75%	Monthly payment=	1003.51
Month	Beginning balance (A)	B. Monthly payment	B. Interest = M*A	B. Principal paid	C. Ending balance
1	128000.00	1003.51 = first payment	960.00	43.51	127956.49

Where

Interest paid = Beginning balance * Monthly interest rate

Principal = Monthly payment – interest paid

Ending balance = beginning balance – principal paid

Beginning balance = previous Month ending balance