Procedure:

In our brief case study, we assume the Thomas and Jefferson families have identical mortgages (30-year term, fixed-rate 6% APR, and a loan amount of $175,000). The Thomas family will not pay extra but the Jeffersons will. Follow the steps below prior to your analysis.

1.Using the Payment mini calculator of the Financial Toolboxes spreadsheet, calculate the mortgage payment (the same for both families).

2.Assume that the Thomas's will make only the required mortgage payment.TheJeffersons, however, would like to pay off their loan early. They decide to make the equivalent of an extra payment each year by adding an extra 1/12 of the payment to the required amount.

Calculate the following to find what they plan to pay each month:

a.1/12 of the required monthly payment

b.Jeffersons monthly payment found by adding this 1/12 to the required payments