Question

Kathy fields wants to buy a condominium selling for $95,000. The bank is requiring 20% down and is charging 9.5% interest for a 25 year loan. determine the amount required down payment and the amount of the monthly payment for the principal and interest.

Answer 1

The down payment is 19000 and monthly payment is 664.009

Step-by-step explanation:

The purchase price of condominium = $95000

Down payment = 20%

Interest charged = 9.5 %

Time period = 25 years

Down payment amount = 95000 × 20% = 19000

Remaining loan amount = $76000

Below is the calculation of monthly payment:

`\text{Present vlaue of annuity} =(A(1-(1+r)^(-n)))/(r) \\A = monthy \ installment \\76000 = (A(1-(1+ 0.095/12)^(-25* 12)))/( 0.095/12) \\A(0.906112) = 601.667 \\A = 664.009`