Chapter 11

Chapter 11

Open Ended

Suppose you buy a home and finance $285,000 at $2,293.17 per month for 30 years. What is the amount of interest paid? Round to the nearest dollar.

Include what formula you use!

The amount of interest paid is $540,541

 $A=P+I\$  
 $I\ =\ A-P$  
 $𝐼=2293.17(12)(30)−285000$  

 $=\ \text{}540,541$ 

Open Ended

Find the cost of a car in 5 years, assuming a constant inflation rate of 9%, when the car starts at $19,000. Round to the nearest dollar.

Include the formula you use!

$29,798

 $A\ =\ Pe^{rt}$  

Open Ended

Find the present value needed to achieve $420,000 in 30 years at 6% interest, compounded monthly. Round to the nearest dollar.

Include the formula you use!

The present value is $67,738

 $P=A\ \left(1+\frac{r}{n}\right)^{-nt}$  

Open Ended

Suppose you buy a $503,000 home, bought with a 20% down payment, and the balance financed for 30 years at 4.3%. Find the monthly payment for this loan. Round to the nearest dollar.

Include the formula you use!

Your monthly payments are $1,991

Since we can make a 20% down payment the loan amount, P, only needs to be the remaining 80%. 𝑃 = 0.8(503000) = 402400.

 $m\ =\ \frac{P\left(\frac{r}{n}\right)}{1-\left(1+\frac{r}{n}\right)^{-nt}}$