   Chapter 14.I, Problem 9RE ### Contemporary Mathematics for Busin...

8th Edition
Robert Brechner + 1 other
ISBN: 9781305585447

#### Solutions

Chapter
Section ### Contemporary Mathematics for Busin...

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

# As one of the loan officers for Grove Gate Bank, calculate the monthly principal and interest PI, using Table 14-1 and the monthly PITI for the following mortgages. Amount Interest Term of Monthly Annual Annual Monthly Financed Rate Loan (years) PI Property Tax Insurance PITI $76,400 8.00% 20$639.47 $1,317$866 $821.39 To determine To calculate: The monthly PI and monthly PITI if the amount financed is$76,400, interest rate is 8%, term of loan is 20 years, annual property tax is $1,317 and annual insurance is$866.

Explanation

Given Information:

The amount financed is $76,400, interest rate is 8%, term of loan is 20 years, annual property tax is$1,317 and annual insurance is $866. Formula used: Steps to compute monthly PI and monthly PITI; 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

Step 4: Compute the monthly tax and insurance portion, TI as;

Monthly TI=Estimated property tax+Hazard insurance12

Step 4: Compute the total monthly PITI as;

Monthly PITI=Monthly PI+Monthly TI

Calculation:

The amount financed is $76,400, interest rate is 8%, term of loan is 20 years, annual property tax is$1,317 and annual insurance is $866. So, the number of$1000s financed is calculated as;

Number of \$1000s financed=Amount financed1,000=76,4001000=76

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