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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