Posted by Anonymous on Saturday, September 11, 2010 at 4:50pm.
Rebecca and Tom Payton have decided to buy a home that costs $200,000. The Paytons can put down 20% of the home's price. They have applied for a 15-year, 9% FRM to finance the balance. They Paytons have a combined gross annual income of $70,000.
I've asked this before, but the answer someone else got wasn't one of the options.
precal - Ms. Sue, Saturday, September 11, 2010 at 4:56pm
What is your question?
precal - Anonymous, Saturday, September 11, 2010 at 4:57pm
How much will the Paytons pay to satisfy their mortgage loan, if they make all the payments on time for the amount being financed?
precal - drwls, Saturday, September 11, 2010 at 4:58pm
You have not asked a question. What are the choices supposed to represent?
precal - Anonymous, Saturday, September 11, 2010 at 5:00pm
^^ previous post. SORRY.
precal - drwls, Saturday, September 11, 2010 at 5:09pm
They start the mortgage owing $160,000. For a ball park estimate, they will have an average balance of about 100,000 for 15 years, and will have to pay about 135,000 in interest, plus the principle. That would make a total of 295,000. (c) is the closest to that. There are formulas you could use fr the exact value, but since this is multiple choice, a quick estimate makes more sense.
precal - Henry, Saturday, September 11, 2010 at 10:27pm
That was a very close estimate!
Using the formula, I calculated:
Pt = 292108.80,
Monthly = 1622.83,
Int = 132108.78.
FORMULA:Pt =(Po*r*t) / (1 - (1 + r)^-t
Pt = Pay-back amt.
Po = Loan amt.
r = Monthly int rate expressed as a decimal.
t = Length of loan(15 years).
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