Question

Dave wants to borrow $22,000 from first finance bank. the bank will give him a 15 year loan at an interest rate od 4.85 % how mich will he pay the bank in interest over the life of the loan? Round to the nearest hundred dollar ?

Answer 1

Problem 7:

We determine the time as follows:

*We can proceed using the following expression:

`t=(\ln ((m)/(p))-\ln ((m)/(p)-(r)/(n)))/(n\ln (1+(r)/(n)))`

Here, t is the time it will take to pay, m is the maximum she can afford to pay each month, p is the base loan value, r is the interest rate, n is the number of periods. Now we replace:

`t=(\ln((500)/(20000))-\ln((500)/(20000)-(0.071)/(12)))/(12\ln(1+(0.071)/(12)))\Rightarrow t\approx3.8`

So, she will take approximately 3.8 years to pay up the loan.

Problem 8:

We determine the time he has as follows:

We use the expression:

`t=(\ln ((m)/(p))-\ln ((m)/(p)-(r)/(n)))/(n\ln (1+(r)/(n)))`

Here, t is the time it will take to pay, m is the maximum he can afford to pay each month, p is the base loan value, r is APR, n is the number of periods. Now we replace:

`t=(\ln((400)/(14000))-\ln((400)/(14000)-(0.068)/(12)))/(12\ln(1+(0.068)/(12)))\Rightarrow t\approx3.3`

So, he will take approximately 3.3 years to pay the loan.

Problem 10:

We determine the amount he will have to pay as follows:

*We use the following expression:

`V=P(1+n)^t`

Here V is the value to obtain, P is the original amount, n is the interest rate and t is the number of periods, now we replace:

`V=(22000)(1-0.0485)^(15)\Rightarrow V\approx44766.09`

So, after 15 years he will have to pay approximately $44766.09.