Question

Jen purchased a condo in naples fl for $699,000. she put 20% down and financed the rest at 5% for 35 years. what are jen's total finance charges

Answer 1

The formula:

$699,000 * .80 = $559,200

Number of payments = 35 years x 12 months = 420 months

Interest rate as a decimal = 5% ÷ 100 = .005

Interest due on each payment = .05 ÷ 12 = 0.00416666666666666666666666666667

Payment = (0.00416666666666666666666666666667 * 559,200) / 1 – (1 + 0.00416666666666666666666666666667)^ - 420

= $2330.0000000000000000000000000019 / 0.82559311017996182684375136875003

= $2822.213474494850504974364179856

$2822.213474494850504974364179856 x 420 months - $559,200 =

$1,185,329.6592878372120892329555395 – $559,200 = $626,129.65928783721208923295553952

Therefore, Jen's total finance charges is $626,129.66

Answer 2

$626,128.20

Explanation:

Jen purchased a condo for $699,000. She put 20% down and financed the rest at 5% for 35 years.

The amount she made by down payment is,

`=699,000* (20)/(100)`

`=\$139,800`

The amount left for monthly payment is,

`=699,000-139,800=\$559,200`

We know that,

`\text{PV of annuity}=P\left[(1-(1+r)^(-n))/(r)\right]`

Here,

PV = Present Value = $559,200,

P = Monthly payment,

r = Monthly rate of interest =
`(0.05)/(12)`

n = number of months = 35 years = 420 months

Putting the values,

`\Rightarrow 559200=P\left[(1-(1+(0.05)/(12))^(-420))/((0.05)/(12))\right]`

`\Rightarrow P=(559200)/(\left[(1-(1+(0.05)/(12))^(-420))/((0.05)/(12))\right])`

`\Rightarrow P=\$2,822.21`

So total payment will be,

`=139,800+(420* 2,822.21)`

`=\$1,325,128.2`

Therefore, the finance charge will be,

`=1,325,128.2-699,000=\$626,128.20`