Suppose you want to buy a $148,000 home. You found a bank that offers a 30-year loan at 3.5% APR.What will be your monthly payment? (Round to the nearest cent.)$How much would you end up paying the bank for the home after 30 years? (Round to the nearest cent.)$Suppose you wanted to reduce the time of your loan to 25 years. What would be your new monthly payment? (Round to the nearest cent.)$How much would you end up paying the bank for the home after 25 years? (Round to the nearest cent.)$How much did you save by reducing the time of your mortgage loan? (Round to the nearest cent.)$

Question
Asked Feb 10, 2020
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Suppose you want to buy a $148,000 home. You found a bank that offers a 30-year loan at 3.5% APR.

What will be your monthly payment? (Round to the nearest cent.)

$

How much would you end up paying the bank for the home after 30 years? (Round to the nearest cent.)

$

Suppose you wanted to reduce the time of your loan to 25 years. What would be your new monthly payment? (Round to the nearest cent.)

$

How much would you end up paying the bank for the home after 25 years? (Round to the nearest cent.)

$

How much did you save by reducing the time of your mortgage loan? (Round to the nearest cent.)

$
 
 
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Expert Answer

Step 1

Loan Amount = $148,000

Time Period = 30 years

Interest Rate = 3.5%

 

The calculation of the monthly payment using the PMT function of the excel is as follows:

To open the "PMT function" window - MS-Excel --> Formulas --> Financials --> PMT.

Finance homework question answer, step 1, image 1

Hence, the monthly payment is $665.

Step 2

Monthly Payment = $665

Time Period = 30 years

Number of Payments in a Period (N) = 12

 

The calculation of the total amount paid at the end of 30 years is as follows:

Finance homework question answer, step 2, image 1

Hence, the total amount paid at the end of 30 years is $239,400.

Step 3

Loan Amount = $148,000

Time Period = 25 years

Interest Rate = 3.5%

 

The calculation of the monthly payment using the PMT function of the excel is as follows:

To open the "PMT function" window - MS-Excel --> Formulas --> Financials --> PMT.

Finance homework question answer, step 3, image 1

Hence, the mon...

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