2. A homeowner wishes to borrow $500,000, but must repay interest and principal with monthly flat...
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2. A homeowner wishes to borrow $500,000, but must repay interest and principal with monthly flat payments over 30 years. If the simple annual interest rate is 6%, i.e. the monthly rate is 0.5%, what is the monthly payment? What is the remaining balance (amount owed) after five years of payments? 3. Suppose a bank wanted to offer the borrower in #2 an option to have the payments grow at 1% a month for the full 30 year period. What would the initial payment be in this case, in order to have the same present value? 2. A homeowner wishes to borrow $500,000, but must repay interest and principal with monthly flat payments over 30 years. If the simple annual interest rate is 6%, i.e. the monthly rate is 0.5%, what is the monthly payment? What is the remaining balance (amount owed) after five years of payments? 3. Suppose a bank wanted to offer the borrower in #2 an option to have the payments grow at 1% a month for the full 30 year period. What would the initial payment be in this case, in order to have the same present value?
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Monthly payment calculation To calculate the monthly payment we can use the formula for the present ... View the full answer
Related Book For
Discovering Advanced Algebra An Investigative Approach
ISBN: 978-1559539845
1st edition
Authors: Jerald Murdock, Ellen Kamischke, Eric Kamischke
Posted Date:
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