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 2 years ago
Miss Crystal Palace just purchased – you guessed it – a crystal palace for $650,000. She makes a
25% down payment and finances the balance with a mortgage at an interest rate of 5.6% for 15
years, making monthly payments.
a. What amount will she borrow?
b. Complete the amortization table for the first three payments. (Show all work!)
 2 years ago
Miss Crystal Palace just purchased – you guessed it – a crystal palace for $650,000. She makes a 25% down payment and finances the balance with a mortgage at an interest rate of 5.6% for 15 years, making monthly payments. a. What amount will she borrow? b. Complete the amortization table for the first three payments. (Show all work!)

This Question is Closed

phi
 2 years ago
Best ResponseYou've already chosen the best response.1can you answer (a) ? 75% of 650,000 or 650,000 25% of 650,000

monroe17
 2 years ago
Best ResponseYou've already chosen the best response.1oh wait no. 649999.75?

monroe17
 2 years ago
Best ResponseYou've already chosen the best response.1no isn't my first answer right?

phi
 2 years ago
Best ResponseYou've already chosen the best response.1If you put down a downpayment, do you expect it to be all 650,000? to do this, remember that 25% is the same as 25/100 (or 1/4)

phi
 2 years ago
Best ResponseYou've already chosen the best response.1that is the down payment. How much is the loan?

monroe17
 2 years ago
Best ResponseYou've already chosen the best response.1162500(1+0.056/12)^12*15 162500(1+0.056/12)^180 (162500)(2.311845392)=$375,674.88

monroe17
 2 years ago
Best ResponseYou've already chosen the best response.1ohh in my equation where i put 162500.. is that supposed to be 487500 instead?

phi
 2 years ago
Best ResponseYou've already chosen the best response.1162,500 is 1/4 of the 650,000 162,500 is the amount paid up front. You must now borrow the remainder. so your work up above looks good except 162500 is not the correct amount for the loan

monroe17
 2 years ago
Best ResponseYou've already chosen the best response.1the amount of the loan is 1,127,024.63?

phi
 2 years ago
Best ResponseYou've already chosen the best response.1For (a), I think they want 487,500 to do (b) you have to figure out how much the total loan ends up costing. Is that the 1,127,024 number?

monroe17
 2 years ago
Best ResponseYou've already chosen the best response.1yes the total loan I calculated is 1,127,024.63 I believe.

phi
 2 years ago
Best ResponseYou've already chosen the best response.1now find the monthly payment

phi
 2 years ago
Best ResponseYou've already chosen the best response.1now you can do the amortization schedule start with the loan balance at the start 487500 add one month of interest (0.056/12)*487500 then subtract off the payment to get the loan balance for the next month. do the same thing for the 2nd (and 3rd) month, except use the new loan principal

monroe17
 2 years ago
Best ResponseYou've already chosen the best response.1what new loan principal?

phi
 2 years ago
Best ResponseYou've already chosen the best response.1when you make a payment, the amount you owe goes down

monroe17
 2 years ago
Best ResponseYou've already chosen the best response.1(0.056/12)*487500= 2275

monroe17
 2 years ago
Best ResponseYou've already chosen the best response.14875002275= 485225 for the next month?

monroe17
 2 years ago
Best ResponseYou've already chosen the best response.12264.38485235.62 2264.43482971.19

monroe17
 2 years ago
Best ResponseYou've already chosen the best response.1how do I put that in a chart though with the.. amount of payment interest payment applied to principal and balance?

phi
 2 years ago
Best ResponseYou've already chosen the best response.1OK, I just checked about loans. there is a formula to figure out the monthly payment FV= payment *( (1+i)^n 1)/i where future value FV is the number you found, does this look familiar?

monroe17
 2 years ago
Best ResponseYou've already chosen the best response.1so the formula I used gave me 9268.65 as the monthly payment

monroe17
 2 years ago
Best ResponseYou've already chosen the best response.1P=1127024.63 n=180 r/m=0.56/12=0.0046666667 1127024.63(1+0.0046666667)^180=R[(1+0.0046666667)^1801)/(0.0046666667)] 2605506.713=R(281.1097278) R=9268.65

monroe17
 2 years ago
Best ResponseYou've already chosen the best response.1the amount is 1127024.63 the annual rate is 5.6% and the time is 15 years

monroe17
 2 years ago
Best ResponseYou've already chosen the best response.1and the interest payment is 5259.45

phi
 2 years ago
Best ResponseYou've already chosen the best response.1I match up, but with 1127024.63=R(281.1097278)

monroe17
 2 years ago
Best ResponseYou've already chosen the best response.14009.2 is the applied principal and the balance is 1127024.63

monroe17
 2 years ago
Best ResponseYou've already chosen the best response.1do I not solve 1127024.63(1+0.0046666667)^180 that?

monroe17
 2 years ago
Best ResponseYou've already chosen the best response.1because in this example I have is shows to do that..

phi
 2 years ago
Best ResponseYou've already chosen the best response.1for your formula, it looks like you should use the original loan amount on the left hand side. Do you notice that the left side is future value (1,237,024) which can be calculated as 487500*(1+0.056/12)^180

monroe17
 2 years ago
Best ResponseYou've already chosen the best response.1ohh so after solving it becomes 1127024.63

monroe17
 2 years ago
Best ResponseYou've already chosen the best response.1so is the monthly payment 4009.20?

phi
 2 years ago
Best ResponseYou've already chosen the best response.1yes. so now to the amort. to answer amount of payment interest payment applied to principal and balance? you have the first part. interest is principal* 0.0046666667 (5.6% /12) so you start with P (487500) add interest subtract payment get new P (call it P2 for second month) The interest payment is the amount of interest due. the applied to principal is the amount of the payment left over after paying the interest P2 is the balance

monroe17
 2 years ago
Best ResponseYou've already chosen the best response.1wait wait.. is the interest payment 5259.45? (1127024.63)(0.0046666667)(1)

phi
 2 years ago
Best ResponseYou've already chosen the best response.1No, you use Present value (not future value) when you apply the interest.

monroe17
 2 years ago
Best ResponseYou've already chosen the best response.1(487500)(0.0046666667)(1)=2275.00

phi
 2 years ago
Best ResponseYou've already chosen the best response.1that looks good. now the payment pays that interest and what is left over pays down the principal

monroe17
 2 years ago
Best ResponseYou've already chosen the best response.14009.202275.00=1734.20?

phi
 2 years ago
Best ResponseYou've already chosen the best response.1so now how much is the new principal?

phi
 2 years ago
Best ResponseYou've already chosen the best response.1so put those numbers in the first row. now do it again with P=485765.80

monroe17
 2 years ago
Best ResponseYou've already chosen the best response.1so.. 1734.20*0.0046666667*1?

phi
 2 years ago
Best ResponseYou've already chosen the best response.1You seem to be missing the main point. you pay interest on the dollars you owe (think of it as rent) after one payment you owe 485765.80. that is what the interest is on (not the 1734)

monroe17
 2 years ago
Best ResponseYou've already chosen the best response.12266.91? that is the next interest payment for month 2?

monroe17
 2 years ago
Best ResponseYou've already chosen the best response.1then 1742.29 is the applied principal for month 2?

monroe17
 2 years ago
Best ResponseYou've already chosen the best response.1then the next balance is 484023.51?

phi
 2 years ago
Best ResponseYou've already chosen the best response.1yes. one more payment to go

monroe17
 2 years ago
Best ResponseYou've already chosen the best response.12258.78 for the interest payment?

monroe17
 2 years ago
Best ResponseYou've already chosen the best response.1and 1750.42 and the applied principal?

phi
 2 years ago
Best ResponseYou've already chosen the best response.1Here is a site that computes the amort http://bretwhissel.net/cgibin/amortize

monroe17
 2 years ago
Best ResponseYou've already chosen the best response.1thank you so much for your help!

phi
 2 years ago
Best ResponseYou've already chosen the best response.1It helped remind me how to do this stuff. It is a bit complicated.

monroe17
 2 years ago
Best ResponseYou've already chosen the best response.1haha yeah, well before I had absolute no idea where to start. Thank you so much for helping me..
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