# Finance Math

Daniel and Jan agreed to pay \$560,000 for a four-bedroom colonial home
in Waltham, Mass., with \$60,000 down payment. They have a 30-year mortgage at a fixed rate of 6.00%. (a) How much is their monthly payment? (b) After the first payment, what would be the balance of the principal?

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1. i = .06/12 = .005
n = 12*30 = 360
pmt = ??

pmt( 1 - 1.005^-360)/.005 = 500000
pmt = 2997.75

the interest in the first month = .005(500000) = 2500
so the actual reduction in the principal for the 1st month = 2997.75-2500 = 497.75

leaving a balance of \$499,502.24

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