Jamie and Eddie are buying an apartment for $320,000. Their loan officer tells them that their principal will decrease by 4.5% every year if they make the minimum mortagage payments. completed the table to predict the principle for the first 3 years. Round to the nearest hundreth, if applicable.
To predict the principle for the first 3 years, we need to apply the 4.5% decrease to the initial principle of $320,000.
Year | Principal
------| ----------
Year 1 | $320,000 x (1 - 0.045)
Year 2 | Previous Year's Principal x (1 - 0.045)
Year 3 | Previous Year's Principal x (1 - 0.045)
Calculating each year's principal:
Year 1: $320,000 x (1 - 0.045) = $320,000 x 0.955 = $305,600
Year 2: $305,600 x (1 - 0.045) = $305,600 x 0.955 = $291,608
Year 3: $291,608 x (1 - 0.045) = $291,608 x 0.955 = $278,504
Completing the table:
Year | Principal
------| ----------
Year 1 | $305,600
Year 2 | $291,608
Year 3 | $278,504