precal

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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.

A.)$ 200,000
B.)$ 174,400
C.)$ 292,108

I've asked this before, but the answer someone else got wasn't one of the options.

  • precal -

    What is your question?

  • precal -

    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 -

    You have not asked a question. What are the choices supposed to represent?

  • precal -

    ^^ previous post. SORRY.

  • precal -

    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 -

    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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