Question

In this situation, you want to take out a 12 year loan for $215,000. The current interest rate is 5.75%, and you will make monthly payments.

1. Fill out the data variable (i have already filled out the table please let me know what is wrong)!!!

2. Assuming you can afford a monthly payment of $3,000, which loan term should you choose?

3. If you wanted to avoid paying more than $110,000 in interest, which is the highest loan term you could choose?

Loan Terms One Variable Data Table Borrowed$ 215,000 Rate Term Payment$2,071.47 (principal and interest) 0.48% (monthly) Terms MonthlyTotal Loan Total Interest 144 (payments) Payment ai ai $215,000.00 10 20 $1,032.00$1,039.47 $213,960.53 30 $1,027.01$1,044.46 $212,916.07 40$1,022.00 $1,049.48 $211,866.59 50$1,016.96$1,054.51 $210,812.08 60 $1,011.90 $1,059.57 $209,752.50 70 $1,006.81$1,064.66 $208,687.84 80$1,001.70$1,069.77 $207,618.07 90 100 $991.41$1,080.07 $205,463.10 110 $986.22$1,085.25 $204,377.85 120$981.01$1,090.46 $203,287.39 130$975.78 $1,095.69 $202,191.70 140 150 $965.24$1,106.24$199,984.51 160S959.93$1,111.55 $198,872.97 170$954.59$1,116.88 $197,756.08 180 190$943.84$1,127.63 $195,506.21 200 $938.43$1,133.04$194,373.17 210 $932.99$1,138.48$193,234.69 220 230 $922.04$1,149.44 $190,941.30 240 $916.52$1,154.95 $189,786.35 a) Assuming you can afford a monthly payment of $3,000, what loan term should you 88.04281 choose? b) If you wanted to avoid paying more tharn $100,000 in interest, what is the highest loan term you could choose? S996.57 $1,074.91 $206,543.117 S970.52$1,100.95$201,090.75 949.23$1,122.24$196,633.84 927.53$1,143.95 $192,090.74

Answer 1

1. Extract of Loan Schedule is provided below - further 11 years will go as same.

Borrowed	215,000.00
Rate	5.75%
Term	144
Payment	2,070.37
PmtNo.	Beginning Balance	Total Payment	Principal	Interest	Ending Balance
1	215,000.00	2,070.37	1,040.16	1,030.21	213,959.84
2	213,959.84	2,070.37	1,045.14	1,025.22	212,914.70
3	212,914.70	2,070.37	1,050.15	1,020.22	211,864.54
4	211,864.54	2,070.37	1,055.18	1,015.18	210,809.36
5	210,809.36	2,070.37	1,060.24	1,010.13	209,749.12
6	209,749.12	2,070.37	1,065.32	1,005.05	208,683.80
7	208,683.80	2,070.37	1,070.42	999.94	207,613.38
8	207,613.38	2,070.37	1,075.55	994.81	206,537.82
9	206,537.82	2,070.37	1,080.71	989.66	205,457.11
10	205,457.11	2,070.37	1,085.89	984.48	204,371.23
11	204,371.23	2,070.37	1,091.09	979.28	203,280.14
12	203,280.14	2,070.37	1,096.32	974.05	202,183.82

2. If monthly payment of 3000 can be afforded then, 89 terms would be taken - extract is shared below -

Borrowed	215,000.00
Rate	5.75%
Term	89
Payment	3,000.00
PmtNo.	Beginning Balance	Total Payment	Principal	Interest	Ending Balance
1	215,000.00	3,000.00	1,969.79	1,030.21	213,030.21
2	213,030.21	3,000.00	1,979.23	1,020.77	211,050.98
3	211,050.98	3,000.00	1,988.71	1,011.29	209,062.26
4	209,062.26	3,000.00	1,998.24	1,001.76	207,064.02
5	207,064.02	3,000.00	2,007.82	992.18	205,056.20
6	205,056.20	3,000.00	2,017.44	982.56	203,038.76
7	203,038.76	3,000.00	2,027.11	972.89	201,011.66
8	201,011.66	3,000.00	2,036.82	963.18	198,974.84
9	198,974.84	3,000.00	2,046.58	953.42	196,928.26
10	196,928.26	3,000.00	2,056.39	943.61	194,871.87
11	194,871.87	3,000.00	2,066.24	933.76	192,805.64
12	192,805.64	3,000.00	2,076.14	923.86	190,729.50

3. 3. If payment of interest not more than 110000 can be afforded then 15 years is the best time for a loan . Extract of repayment schedule is shared below -

Borrowed	215,000.00
Rate	5.75%
Term	180
Payment	1,785.38
PmtNo.	Beginning Balance	Total Payment	Principal	Interest	Ending Balance	Cumulative Interest
1	215,000.00	1,785.38	755.17	1,030.21	214,244.83	1,030.21
2	214,244.83	1,785.38	758.79	1,026.59	213,486.03	2,056.80
3	213,486.03	1,785.38	762.43	1,022.95	212,723.61	3,079.75
4	212,723.61	1,785.38	766.08	1,019.30	211,957.53	4,099.05
5	211,957.53	1,785.38	769.75	1,015.63	211,187.77	5,114.68
6	211,187.77	1,785.38	773.44	1,011.94	210,414.33	6,126.62
7	210,414.33	1,785.38	777.15	1,008.24	209,637.19	7,134.86
8	209,637.19	1,785.38	780.87	1,004.51	208,856.32	8,139.37
9	208,856.32	1,785.38	784.61	1,000.77	208,071.71	9,140.14
10	208,071.71	1,785.38	788.37	997.01	207,283.33	10,137.15
11	207,283.33	1,785.38	792.15	993.23	206,491.18	11,130.38
12	206,491.18	1,785.38	795.94	989.44	205,695.24	12,119.82