Concept explainers
HOME MORTGAGES The monthly payment that amortizes a loan of A dollars in t years when the interest rate is r/year, compounded monthly, is given by
P = f(A, r, t) =
- a. What is the monthly payment for a home mortgage of $300,000 that will be amortized over 30 years with an interest rate of 4%/year? An interest rate of 6%year?
- b. Find the monthly payment for a home mortgage of $300,000 that will be amortized over 20 years with an interest rate of 6%/year.
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Applied Calculus for the Managerial, Life, and Social Sciences: A Brief Approach
- Equity in a Home When you purchase a home by securing a mortgage, the total paid toward the principal is your equity in the home. Technically, the lending agency calculates your equity by subtracting the amount you still owe on your mortgage from the current value of your home, which may be higher or lower than your principal. Assume that your mortgage is for 350, 000 at a monthly rate of 0.007 as a decimal and that the term of the mortgage is 30 years. Then your equity after k monthly payments is 350, 0001.007k-11.007360-1 dollars. Calculate the equity in your home after 10 years.arrow_forwardInterest Rate A man purchases a $2000 diamond ring for a down payment $200 and monthly installments of $88 for 2 years. Assuming that interest is compounded monthly, what interest rate is he paying?arrow_forward
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