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Contemporary Mathematics for Busin...

8th Edition
Robert Brechner + 1 other
ISBN: 9781305585447

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BuyFindarrow_forward

Contemporary Mathematics for Busin...

8th Edition
Robert Brechner + 1 other
ISBN: 9781305585447
Textbook Problem

Ben and Mal Scott plan to buy a home for $272,900. They will make a 10% down payment and qualify for a 25-year. 7% mortgage loan.

a. What is the amount of their monthly payment?

b. How much interest will they pay over the life of the loan?

(a)

To determine

To calculate: The amount of monthly payment and the total amount of interest they have to pay over the loan period when Home mortgage is given as $272,900, rate of interest is 7% and the time period is 25 years.

Explanation

Given Information:

The provided mortgage is $272,900, rate of interest is 7% and the time period is 25 years.

Formula used:

The following step are used to find the monthly mortgage payment by using an amortization table:

Step-1 Find the number of $1,000s financed.

Number of $1,000s financed=Amount finanaced1,000

Step-2 Using Table 14-1, locate the table factor, monthly payment per $1,000s financed, at the intersection of the number-of –year column and thee interest rate row.

Step-3 Calculate the monthly payment.

Monthlypayment=TableFactor×No Of 1000's inthePrinciple

Calculation:

The provided mortgage is $272,900, rate of interest is 7% and the time period is 25 years

(b)

To determine

To calculate: The total amount of interest of Mal Scott have to pay over the loan period when home mortgage is given as $272,900, rate of interest is 7% and the time period is 25 years.

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