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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

Michael Sanchez purchased a condominium for $88,000. He made a 20% down payment and financed the balance with a 30-year. 9% fixed-rate mortgage.

a. What is the amount of the monthly principal and interest portion. PI. of Michael’s loan?

b. Construct an amortization schedule for the first four months of Michael's mortgage.

Payment Monthly Monthly Portion Used to Loan
Number Payment Interest Reduce Principal Balance
0
1
2
3
4

c. If the annual property taxes are $1,650 and the hazard insurance premium is $780 pet year, what is the total monthly PITI of Michael's loan?

(a)

To determine

To calculate: The monthly principal and interest portion, PI, of Michael’s loan, if he purchased a condominium for $88,000 and he made a 20% down payment and financed the balance amount with a 30-year, 9% fixed rate mortgage.

Explanation

Given Information:

Michael’s purchased a condominium for $88,000 and he made a 20% down payment and financed the balance amount with a 30-year, 9% fixed rate mortgage.

Formula used:

Steps to determine the monthly mortgage payment;

Step 1: Compute the number of $1000s financed;

Number of $1000s financed=Amount financed1,000

Step 2: Use table 14.1 (monthly payments to amortize principal and interest per $1000s financed), to locate the table factor at the intersection of the number-of-years column and the interest-rate row.

Step 3: Compute the monthly payment by the formula;

Monthly payment=No of 1000's financed×Table factor

Calculation:

Michael’s purchased a condominium for $88,000 and he made a 20% down payment and financed the balance amount with a 30-year, 9% fixed rate mortgage

(b)

To determine

To calculate: An amortization schedule for the first four months and fill the table below;

Payment Number Monthly Payment Monthly Interest Portion Used to Reduce Principal Loan Balance
0
1
2
3
4

(c)

To determine

To calculate: The total monthly PITI of Michael’s loan, if the annual property taxes are $1,650 and hazard insurance is $780 per year.

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