Andrew Bolkonsky borrows $200,000 to purchase a house for investment purposes on January 1st 2006. The bank lends him the money at an interest rate of 8% p.a. compounded semi-annually (2 times per year). The loan is to be paid off over 30 years by making equal monthly payments starting in exactly one month. a. What are the monthly payments? b. How much will Andrew still owe immediately after making the 24th payment? c. What is the interest portion of his 200th payment? Since Andrew bought the house for investment purposes, the interest is tax-deductible. Thus, at the end of 2006, he has to enter the total interest paid for the year on his tax forms. How much must he enter?
Andrew Bolkonsky borrows $200,000 to purchase a house for investment purposes on
January 1st 2006. The bank lends him the money at an interest rate of 8% p.a.
compounded semi-annually (2 times per year). The loan is to be paid off over 30 years
by making equal monthly payments starting in exactly one month.
a. What are the monthly payments?
b. How much will Andrew still owe immediately after making the 24th payment?
c. What is the interest portion of his 200th payment? Since Andrew bought the house for investment purposes, the interest is tax-deductible. Thus, at the end of 2006, he has to enter the total interest paid for the year on his tax forms. How much must he enter?
Trending now
This is a popular solution!
Step by step
Solved in 4 steps with 8 images
