# A house costs \$185,000. The terms of the sale are 20% down and the remainder to be paid in monthly payments for 20 years at an annual rate of 6.75% compounded monthly.Construct the payment schedule for the first 3 payments by filling in the table belowperiodinterestcum. int.principalbalance0    1    2    3

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A house costs \$185,000. The terms of the sale are 20% down and the remainder to be paid in monthly payments for 20 years at an annual rate of 6.75% compounded monthly.

Construct the payment schedule for the first 3 payments by filling in the table below

 period interest cum. int. principal balance 0 1 2 3
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Step 1

Given:

The cost of the house is \$185,000.

20% of \$185,000 is paid as down payment and the remaining amount should be paid in monthly installments for 20 years at 6.75%.

Step 2

Calculation:

Compute the amount of down payment as follows.

Since 20% of \$185,000 is paid as down payment, obtain the 20% of 185,000.

down payment = \$185,000(20%)

= \$185,000(0.20)

= \$37,000

Thus, the down payment is \$37,000.

So, for the period 0, there is no interest, cumulative interest or principle amount.

Now, compute the balance amount after the 0 period.

Subtract the down payment from the cost of the house.

\$185,000 - \$37,000 = \$148,000.

Thus, the balance amount that should be paid after peroid 0 is \$148,000.

Step 3

Now compute the monthly payment amount as follows.

Since the annual interest rate is given as 6.75%, its monthly interest rate will be (6.75%)/...

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