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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

Prepare an amortization schedule of the first four payments of a $125,000 mortgage at 6 %

for 15 years. Use Table 14-1 to calculate the amount of the monthly payment.

TABLE 14-1 Monthly Payments to Amortize Principal and Interest per $1,000 Financed

Monthly Payments

(Necessary to amortize a loan of $1,000)

Interest 5 10 15 20 25 30 35 40
Rate (%) Years Years Years Years Years Years Years Years
3.50 $18.19 $9.89 $7.15 $5.80 $5.01 $4.49 $4.13 $3.87
3.75 18.30 10.01 7.27 5.93 5.14 4.63 4.28 4.03
4.00 18.42 10.12 7.40 6.06 5.28 4.77 4.43 4.18
4.25 18.53 10.24 7.52 6.19 5.42 4.92 4.58 4.34
4.50 18.64 10.36 7.65 6.33 5.56 5.07 4.73 4.50
4.75 18.76 10.48 7.78 6.46 5.70 5.22 4.89 4.66
5.00 18.88 10.61 7.91 6.60 5.85 5.37 5.05 4.83
5.25 18.99 10.73 8.04 6.74 6.00 5.53 5.21 4.99
5.50 19.11 10.86 8.18 6.88 6.15 5.68 5.38 5.16
5.75 19.22 10.98 8.31 7.03 6.30 5.84 5.54 5.33
6.00 19.34 11.11 8.44 7.17 6.45 6.00 5.71 5.51
6.25 19.45 11.23 8.58 7.31 6.60 6.16 5.88 5.68
6.50 19.57 11.36 8.72 7.46 6.76 6.33 6.05 5.86
6.75 19.69 11.49 8.85 7.61 6.91 6.49 6.22 6.04
7.00 19.81 11.62 8.99 7.76 7.07 6.66 6.39 6.22
7.25 19.92 11.75 9.13 7.91 7.23 6.83 6.57 6.40
7.50 20.04 11.88 9.28 8.06 7.39 7.00 6.75 6.59
7.75 20.16 12.01 9.42 8.21 7.56 7.17 6.93 6.77
8.00 20.28 12.14 9.56 8.37 7.72 7.34 7.11 6.96
8.25 20.40 12.27 9.71 8.53 7.89 7.52 7.29 7.15
8.50 20.52 12.40 9.85 8.68 8.06 7.69 7.47 7.34
8.75 20.64 12.54 10.00 8.84 8.23 7.87 7.66 7.53
9.00 20.76 12.67 10.15 9.00 8.40 8.05 7.84 7.72
9.25 20.88 12.81 10.30 9.16 8.57 8.23 8.03 7.91
9.50 21.01 12.94 10.45 9.33 8.74 8.41 8.22 8.11
9.75 21.13 13.08 10.60 9.49 8.92 8.60 8.41 8.30
10.00 21.25 13.22 10.75 9.66 9.09 8.78 8.60 8.50
10.25 21.38 13.36 10.90 9.82 9.27 8.97 8.79 8.69
10.50 21.50 13.50 11.06 9.99 9.45 9.15 8.99 8.89
10.75 21.62 13.64 11.21 10.16 9.63 9.34 9.18 9.09
11.00 21.75 13.78 11.37 10.33 9.81 9.53 9.37 9.29
11.25 21.87 13.92 11.53 10.50 9.99 9.72 9.57 9.49
11.50 22.00 14.06 11.69 10.67 10.17 9.91 9.77 9.69
11.75 22.12 14.21 11.85 10.84 10.35 10.10 9.96 9.89
12.00 22.25 14.35 12.01 11.02 10.54 10.29 10.16 10.09
12.25 22.38 14.50 12.17 11.19 10.72 10.48 10.36 10.29
12.50 22.50 14.64 12.33 11.37 10.91 10.68 10.56 10.49
12.75 22.63 14.79 12.49 11.54 11.10 10.87 10.76 10.70
13.00 22.76 14.94 12.66 11.72 11.28 11.07 10.96 10.90

To determine

To calculate: The monthly payment and prepare an amortization schedule of the first four payments of $125,000 mortgage at 6% for 15years.

Explanation

Given Information:

The amortization schedule is needed to prepare for $125,000 mortgage at 6% for 15years.

Formula used:

The monthly payment is calculated by the use of the formula:

monthlypayment=numberof $1000s financed×table factornumber of $1000s financed = amount financed1,000

The amortization schedule is prepared by the use of these steps:

Step1: Calculate monthly payment

Step 2: Calculate the amount of interest by using formula I=PRT where p is the current balance, R is interest rate and T is 112.

Step 3: Calculate portion of payment reducing principal by using formula:

portion of payment reducing principal=monthly paymentinterest

Step4: Now calculate the outstanding balance by using formula:

outstanding balance=previous balanceportion of payment reducinge principal

Calculation:

Consider the provided amount,

Now, for the Month I

The number of 1000s financed is

amount financed1000=1250001000=125

And from the table the table factor 6%, 15years is equal to 8.44

Now by the use of the monthly payment formula monthly payment of the first month

Is equal to 125×8

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