Concept explainers
A young couple buying their first home borrow $85,000 for 30 years at 7.2% compounded monthly and make payments of $576.97. After 3 years, they are able to make a one-time payment of $2000 along with their 36th payment.
(a) Find the unpaid balance immediately after they pay the extra $2000 and their 36th payment.
(b) How many regular payments of $576.97 will amortize the unpaid balance from part (a)? Give the answer to one decimal point.
(c) How much will the remaining debt be after the number of full payment periods in (b) is made? How much extra must be included with last full payment to pay off the debt?
(d) How much will the couple pay over the life of the loan by paying the extra $2000?
(e) How much will the couple save over the life of the loan by paying the extra $2000?
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Chapter 6 Solutions
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