Question

Shirley Trembley buys a house for $183,800. She puts 20% down and obtains a simple interest amortized loan for the balance at 11 3/8 % interest for thirty years. Ten years and six months later, she sells her house. Find the unpaid balance on her loan. (Round your answer to the nearest cent.)

Answer 1

Given the amount required to buy the house= $183,800

Shirley puts a down payment of 20% implies, she paid 20% of $183,800

implies, = 0.2 X 183,800 = 36760

The remaining amount = $147040

So, for this amount, she has to make the monthly installments on the total value.

We have to find the future value for the remaining amount i.e how much it becomes after 30 years.

FV = P(1+rt)

P =

r- rate = 11 3/8 % =11.375% = 0.11375

t = 30 years

SO, FV =  147040(1+(0.11375X30) )

FV = $ 648814

So, this has to be distributed for 30 years i.e 30X12 = 360 months.

648814/360 = $1802.261 per month

Shirley paid for 10 years and six months. So, 126 months

implies, she paid, 126* 1802.2611 = $227084.9

Remaining amount to be paid = $ 648814 -$227084.9 = $421729.1 for a period of 234 months.