Got Homework?
Connect with other students for help. It's a free community.
Here's the question you clicked on:
 0 viewing
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!)
 one year ago
 one year 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!)
 one year ago
 one year ago

This Question is Closed

phiBest ResponseYou've already chosen the best response.1
can you answer (a) ? 75% of 650,000 or 650,000 25% of 650,000
 one year ago

monroe17Best ResponseYou've already chosen the best response.1
oh wait no. 649999.75?
 one year ago

monroe17Best ResponseYou've already chosen the best response.1
no isn't my first answer right?
 one year ago

phiBest ResponseYou've already chosen the best response.1
If 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)
 one year ago

phiBest ResponseYou've already chosen the best response.1
that is the down payment. How much is the loan?
 one year ago

monroe17Best ResponseYou've already chosen the best response.1
162500(1+0.056/12)^12*15 162500(1+0.056/12)^180 (162500)(2.311845392)=$375,674.88
 one year ago

monroe17Best ResponseYou've already chosen the best response.1
ohh in my equation where i put 162500.. is that supposed to be 487500 instead?
 one year ago

phiBest ResponseYou've already chosen the best response.1
162,500 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
 one year ago

monroe17Best ResponseYou've already chosen the best response.1
the amount of the loan is 1,127,024.63?
 one year ago

phiBest ResponseYou've already chosen the best response.1
For (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?
 one year ago

monroe17Best ResponseYou've already chosen the best response.1
yes the total loan I calculated is 1,127,024.63 I believe.
 one year ago

phiBest ResponseYou've already chosen the best response.1
now find the monthly payment
 one year ago

phiBest ResponseYou've already chosen the best response.1
now 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
 one year ago

monroe17Best ResponseYou've already chosen the best response.1
what new loan principal?
 one year ago

phiBest ResponseYou've already chosen the best response.1
when you make a payment, the amount you owe goes down
 one year ago

monroe17Best ResponseYou've already chosen the best response.1
(0.056/12)*487500= 2275
 one year ago

monroe17Best ResponseYou've already chosen the best response.1
4875002275= 485225 for the next month?
 one year ago

monroe17Best ResponseYou've already chosen the best response.1
2264.38485235.62 2264.43482971.19
 one year ago

monroe17Best ResponseYou've already chosen the best response.1
how do I put that in a chart though with the.. amount of payment interest payment applied to principal and balance?
 one year ago

phiBest ResponseYou've already chosen the best response.1
OK, 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?
 one year ago

monroe17Best ResponseYou've already chosen the best response.1
so the formula I used gave me 9268.65 as the monthly payment
 one year ago

monroe17Best ResponseYou've already chosen the best response.1
P=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
 one year ago

monroe17Best ResponseYou've already chosen the best response.1
the amount is 1127024.63 the annual rate is 5.6% and the time is 15 years
 one year ago

monroe17Best ResponseYou've already chosen the best response.1
and the interest payment is 5259.45
 one year ago

phiBest ResponseYou've already chosen the best response.1
I match up, but with 1127024.63=R(281.1097278)
 one year ago

monroe17Best ResponseYou've already chosen the best response.1
4009.2 is the applied principal and the balance is 1127024.63
 one year ago

monroe17Best ResponseYou've already chosen the best response.1
do I not solve 1127024.63(1+0.0046666667)^180 that?
 one year ago

monroe17Best ResponseYou've already chosen the best response.1
because in this example I have is shows to do that..
 one year ago

phiBest ResponseYou've already chosen the best response.1
for 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
 one year ago

monroe17Best ResponseYou've already chosen the best response.1
ohh so after solving it becomes 1127024.63
 one year ago

monroe17Best ResponseYou've already chosen the best response.1
so is the monthly payment 4009.20?
 one year ago

phiBest ResponseYou've already chosen the best response.1
yes. 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
 one year ago

monroe17Best ResponseYou've already chosen the best response.1
wait wait.. is the interest payment 5259.45? (1127024.63)(0.0046666667)(1)
 one year ago

phiBest ResponseYou've already chosen the best response.1
No, you use Present value (not future value) when you apply the interest.
 one year ago

monroe17Best ResponseYou've already chosen the best response.1
(487500)(0.0046666667)(1)=2275.00
 one year ago

phiBest ResponseYou've already chosen the best response.1
that looks good. now the payment pays that interest and what is left over pays down the principal
 one year ago

monroe17Best ResponseYou've already chosen the best response.1
4009.202275.00=1734.20?
 one year ago

phiBest ResponseYou've already chosen the best response.1
so now how much is the new principal?
 one year ago

phiBest ResponseYou've already chosen the best response.1
so put those numbers in the first row. now do it again with P=485765.80
 one year ago

monroe17Best ResponseYou've already chosen the best response.1
so.. 1734.20*0.0046666667*1?
 one year ago

phiBest ResponseYou've already chosen the best response.1
You 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)
 one year ago

monroe17Best ResponseYou've already chosen the best response.1
2266.91? that is the next interest payment for month 2?
 one year ago

monroe17Best ResponseYou've already chosen the best response.1
then 1742.29 is the applied principal for month 2?
 one year ago

monroe17Best ResponseYou've already chosen the best response.1
then the next balance is 484023.51?
 one year ago

phiBest ResponseYou've already chosen the best response.1
yes. one more payment to go
 one year ago

monroe17Best ResponseYou've already chosen the best response.1
2258.78 for the interest payment?
 one year ago

monroe17Best ResponseYou've already chosen the best response.1
and 1750.42 and the applied principal?
 one year ago

phiBest ResponseYou've already chosen the best response.1
Here is a site that computes the amort http://bretwhissel.net/cgibin/amortize
 one year ago

monroe17Best ResponseYou've already chosen the best response.1
thank you so much for your help!
 one year ago

phiBest ResponseYou've already chosen the best response.1
It helped remind me how to do this stuff. It is a bit complicated.
 one year ago

monroe17Best ResponseYou've already chosen the best response.1
haha yeah, well before I had absolute no idea where to start. Thank you so much for helping me..
 one year ago
See more questions >>>
Your question is ready. Sign up for free to start getting answers.
spraguer
(Moderator)
5
→ View Detailed Profile
is replying to Can someone tell me what button the professor is hitting...
23
 Teamwork 19 Teammate
 Problem Solving 19 Hero
 Engagement 19 Mad Hatter
 You have blocked this person.
 ✔ You're a fan Checking fan status...
Thanks for being so helpful in mathematics. If you are getting quality help, make sure you spread the word about OpenStudy.