Question

The Turners have purchased a house for $130,000. They made an initial down payment of $30,000 and secured a mortgage with interest charged at the rate of 10%/year compounded monthly on the unpaid balance. The loan is to be amortized over 30 yr. (Round your answers to the nearest cent.)

(a) What monthly payment will the Turners be required to make?
$  

(b) How much total interest will they pay on the loan?
$  

(c) What will be their equity after 10 years?
$  

(d) What will be their equity after 22 years?

$

Answer 1

Please refer to below spreadsheet for calculation and answer. Cell reference also provided.

A B. Purchase price of house Down payement Loan Amount Term in year APR, compounded monthly Monthly interest rate No. of monthly repayment $130,000.00 $30,000.00 $100,000.00 30 10% 0.83% 360 10 a. Monthly payment $877.57 Total interest to be paid on loan $215,925.77 12 b. 13 14 c. 15 Loan Balance after 10 years Home Equity after 10 years $90,938.02 $39,061.98 16 17 d. Loan Balance after 22 years Home Equity after 22 years 18 $57,833.27 $72,166.73 19 20

Cell reference -

B Purchase price of house Down payement Loan Amount Term in year APR, compounded monthly Monthly interest rate No. of monthly repayment 130000 30000 =C2-C3 30 0.1 =C6/12 |=C5*12 8 Monthly payment =PMT(C7,C8,-C4,,0) 10 a. 11 12 b. Total interest to be paid on loan =C10*C8-C4 13 Loan Balance after 10 years Home Equity after 10 years =C4+CUMPRINC(C7,C8,C4,1,120,0) =C2-C14 14 c. 15 16 17 d. Loan Balance after 22 years Home Equity after 22 years =C4+CUMPRINC(C7, C8,C4,1,22*12,0) =C2-C17 18

Hope this will help, please do comment if you need any further explanation. Your feedback would be highly appreciated.