Question

Find the unpaid balance on the debt after 5 years of monthly payments on $190,000 at 3% for 25 years

Answer 1

$114,000

Explanation:

Use formula

`I=P\cdot r\cdot t,`

where

I = interst

P = principal

r = rate

t = time

First, find the interst for 25 years:

I = unknown

P = $190,000

r = 0.03 (3% as decimal)

t = 25

`I_(25)=190,000\cdot 0.03\cdot 25=142,500`

Now find the interest for 5 years:

I = unknown

P = $190,000

r = 0.03 (3% as decimal)

t = 5

`I_5=190,000\cdot 0.03\cdot 5=28,500`

The unpaid balance is

`I=I_(25)-I_5=142,500-28,500=114,000`