Question

Jimmy buys a house for $232,000. He makes a down payment of $20,000 and finances the balance. How much are his monthly payments if the current interest rate is 7.8% and it is a fifteen year loan?

Answer 1

Monthly Payment is $ 2,001.58

Cost of house

$       2,32,000

Less down payment

$           20,000

Loan amount

a

$       2,12,000

Present value of annuity of 1

b

105.91627

Monthly Payment

a/b

$       2,001.58

Working:

Present Value of annuity of 1

=

(1-(1+i)^-n)/i

Where,

=

(1-(1+0.0065)^-180)/0.0065

i

7.8%/12

=

0.0065

=

105.91627

n

15*12

=

180