posted by Anonymous .
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.
What is your question?
How much will the Paytons pay to satisfy their mortgage loan, if they make all the payments on time for the amount being financed?
You have not asked a question. What are the choices supposed to represent?
^^ previous post. SORRY.
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.
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).