Homework Answers
Cost of Home = $350,000
Down Payment = 25% * $350,000
Down Payment = $87,500
Amount Borrowed = Cost of Home - Down Payment
Amount Borrowed = $350,000 - $87,500
Amount Borrowed = $262,500
Annual Interest Rate = 3.75%
Monthly Interest Rate = 0.3125%
Period = 30 years or 360 months
Let Monthly Payment be $x
$262,500 = $x/1.003125 + $x/1.003125^2 + … + $x/1.003125^359 +
$x/1.003125^360
$262,500 = $x * (1 - (1/1.003125)^360) / 0.003125
$262,500 = $x * 215.9288131
$x = $1,215.68
Monthly Payment = $1,215.68
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