Question

2. You purchase a home for $240,000, putting 10% down, and financing the rest with a fixed APR of 5.9% for 30 years. a) Find the amount that you finance. 12 pts) b) Calculate the monthly payment. [4 pts] c) What was the total amount that you paid to the bank for your loan? [2 pts) d) How much did you pay in interest over the term of the loan? [2 pts

Answer 1

a.

Total amount you finance = Home value x (1-Down payment)

= 240000 x (1-10%)

= $216,000

b.

Monthly payment =

R = Rate/Frequency = 5.9% / 12 = 0.004917

PV = value = 216000

N = Total payment term x Frequency = 30 x 12 = 360

PMT = Payment = ?

Formula:

PMT = Payment = PV x R% x (1+R%)^N / ((1+R%)^N - 1)

PMT = 216000*0.004917* (1+0.004917)^360 / ((1+0.004917)^360 - 1))

PMT = $1,281.1749

PMT = $1,281.17

OR

Using financial calculator BA II Plus - Input details:	#
I/Y = Rate/Frequency = 5.9/12 =	0.491667
FV = Future value =	$0.00
N = Total payment term x Frequency = 30 x 12 =	360.00
PV =	-$216,000.00
CPT > PMT = Payment =	$1,281.17

c.

Total amount paid = Payment x Total months for repayment

Total amount paid = 1,281.1749 x 360

Total amount paid = $461,222.95

d.

Total interest paid = Total amount paid - Total amount of finance

Total interest paid = $461,222.95 - $216,000.00

Total interest paid = $245,222.95