Question

You have just graduated from college and landed your first big job. You have always dreamed of being a homeowner, and after carefully shopping for your dream home, you find one that you would like to purchase at a cost of $250,000. After researching banks to find the best interest rate, you find that Banks for Homeowners offers the best rate of 6% interest that compounds monthly for 30 years.

What is the monthly payment for this loan?
What is the unpaid balance of the loan at the end of 5 years?
What is the unpaid balance at the end of the 10th year?

Answer 1

A{n} = (201/200) A{n-1} ; A{0} = 250,000

Answer 2

A{0} = 250,000 (1.005)^0
A{1} = 250,000 (1.005)^1
A{2} = 250,000 (1.005)^2

A{n} = 250,000 (1.005)^n

Answer 3

the interest alone is: I{n} = 250,000 (.005)^n

so take how much youve spent and minus the interest to get balance left

Answer 4

im think mnthly payments are determined by:

250,000 (1.005)^(360)
--------------------
30*12

but i cant be sure

Answer 5

oh, and be sure to convert years to months to use in the "n spots above

Answer 6

just use a fin calc for goodness sake...