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The Kaufman’s have decided to buy a house that costs $260,000. After a down payment of...

The Kaufman’s have decided to buy a house that costs $260,000. After a down payment of $20,000, they can get an interest rate of 7.8%. Find their monthly payments if they set up a 30 year loan What is the total amount they will pay for the house? How much total interest will they wind up paying on the loan?

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Answer #1

Puchase Price = $ 260,000

Down payment = $ 20,000

Loan = $ 240,000

EMI = Loan AMount / PVAF (r%, n)

where r is Int rate per month & n is no. of months

EMI = Loan AMount / PVAF (r%, n)

= $ 240,000 / PVAF (0.65%, 360)

= $ 240,000 / 138.9139

= $ 1727.69

Total Int = (EMI * No. Instalments) - Principal

= ($ 1727.69 * 360) - $ 240,000

= $ 621,968.11 - $ 240,000

= $ 381,968.11

PVAF = [ 1 - (1+r)-n ] /r

= [ 1 - (1+0.0065)-360 ] / 0.0065

= [ 1 - (1.0065)-360 ] / 0.0065

= [ 1 - 0.09706] / 0.0065

= 0.90294 / 0.0065

= 138.9139

Pls comment, if any further assistance is required.

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