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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

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.

Chapter 14.I, Problem 9RE, As one of the loan officers for Grove Gate Bank, calculate the monthly principal and interest PI,

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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