Chapter 14.I, Problem 8RE

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8th Edition

Robert Brechner + 1 other

ISBN: 9781305585447

Textbook Problem

Marc Bove purchased a home with a $78,500 mortgage at

Payment Number |
MonthlyPayment |
MonthlyInterest |
Portion Used to Reduce Principal |
Loan Balance |

01 | $78,500.00 | |||

2 | ||||

3 | ||||

4 |

To determine

**To calculate:** The monthly payment and formulate an amortization schedule for the first four months of marc’s loan if he purchased a home with a $78,500 mortgage at 9% for 15 years.

Explanation

**Given Information:**

The mortgage is

**Formula used:**

To calculate the monthly mortgage payment by using an Amortization table and also to calculate total interest formula, use the following steps.

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

Step 2: With the help of the amortization table, calculate the table factor.

Step 3: Calculate the monthly payment using the table factor:

Step 4: Calculate the total interest of the loan.

The procedure, to create an amortization schedule for a loan is given below:

Step 1: With the help of the amortization table, calculate the amount of monthly payment.

Step 2: Find the amount of interest for the current month using relation *P* is the current outstanding balance of the loan, *R* is the annual interest rate and *T* is

Step 3: Calculate the portion of the payment used to reduce principle.

Step 4: Find the outstanding balance of the mortgage loan.

Step 5: Repeat steps 2, 3 and 4 for each succeeding month and enters the values on a schedule with respective labels.

**Calculation:**

Firstly, find the monthly payment.

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

Step 2: Calculate the table factor.

Table factor for 9%, 15 years is 10.15.

Step 3: Calculate the monthly payment using the table factor:

Now, follow the steps to create an amortization schedule for a loan:

Monthly payment is $796.78.

For month 1:

Now, calculate the portion of the payment used to reduce principle.

Find the outstanding balance of the mortgage loan.

Repeat steps 2, 3 and 4 for four months:

For month 2, do the same calculation as done for month 1.

Month 2:

Calculate the portion of the payment used to reduce principle.

Find the outstanding balance of the mortgage loan.

Sect-14.I P-1TIESect-14.I P-2TIESect-14.I P-3TIESect-14.I P-4TIESect-14.I P-5TIESect-14.I P-1RESect-14.I P-2RESect-14.I P-3RESect-14.I P-4RESect-14.I P-5RE

Sect-14.I P-6RESect-14.I P-7RESect-14.I P-8RESect-14.I P-9RESect-14.I P-10RESect-14.I P-11RESect-14.I P-12RESect-14.I P-13RESect-14.I P-14RESect-14.I P-15RESect-14.I P-16RESect-14.I P-17RESect-14.I P-18RESect-14.I P-19RESect-14.I P-20RESect-14.I P-21RESect-14.I P-22RESect-14.II P-6TIESect-14.II P-7TIESect-14.II P-1RESect-14.II P-2RESect-14.II P-3RESect-14.II P-4RESect-14.II P-5RESect-14.II P-6RESect-14.II P-7RESect-14.II P-8RESect-14.II P-9RESect-14.II P-10RESect-14.II P-11RESect-14.II P-12RESect-14.II P-13RESect-14.II P-14RESect-14.II P-15RESect-14.II P-16RESect-14.II P-17RESect-14.II P-18RESect-14.II P-19RESect-14.II P-20RESect-14.II P-21RESect-14.II P-22RECh-14 P-1CRCh-14 P-2CRCh-14 P-3CRCh-14 P-4CRCh-14 P-5CRCh-14 P-6CRCh-14 P-7CRCh-14 P-8CRCh-14 P-9CRCh-14 P-10CRCh-14 P-11CRCh-14 P-12CRCh-14 P-13CRCh-14 P-14CRCh-14 P-1ATCh-14 P-2ATCh-14 P-3ATCh-14 P-4ATCh-14 P-5ATCh-14 P-6ATCh-14 P-7ATCh-14 P-8ATCh-14 P-9ATCh-14 P-10ATCh-14 P-11ATCh-14 P-12ATCh-14 P-13ATCh-14 P-14ATCh-14 P-15ATCh-14 P-16ATCh-14 P-17ATCh-14 P-18ATCh-14 P-19ATCh-14 P-20ATCh-14 P-21ATCh-14 P-22AT

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