Question

Help using the attached formula. Calculate a 30yr mortgage loan, the house cost $150,000 with $10,000 down at a rate of 5%.

Answer 1

@jdoe0001 would the total interest be 130,554.98?

Answer 2

what are you trying to accomplish? you have information, but the question is unclear

Answer 3

total cost = #payments = initial cost + interest.

#payments - initial cost = interest

there are 30*12 payments, of some determinable amount. but i use my own formula.

Answer 4

I'm just trying to make sure I'm doing it right. When you calculate it with your formula is that the amount of interest you get?

Answer 5

\[A=Bk^n-P\frac{1-k^n}{1-k}\]
when A=0, the loan is paid off
\[0=Bk^n-P\frac{1-k^n}{1-k}\]
\[P\frac{1-k^n}{1-k}=Bk^n\]
\[P=Bk^n\frac{1-k}{1-k^n}\]

Answer 6

B = 150,000 - 10,000 = 140,000

n = 30*12

k is the compounding interest of 1+r/12 soo

\[(30*12)P=(30*12)(140000k^{30*12}\frac{1-k}{1-k^{30*12}})\]
\[(30*12)P-B=(30*12)(140000k^{30*12}\frac{1-k}{1-k^{30*12}})-140000\]
\[interest=(360)(140000k^{30*12}\frac{1-k}{1-k^{30*12}})-140000\]
http://www.wolframalpha.com/input/?i=%28360%29%28140000k%5E%7B30*12%7D%5Cfrac%7B1-k%7D%7B1-k%5E%7B30*12%7D%7D%29-140000%2C+k%3D1%2B.05%2F12

or approx: 130558

Answer 7

now your solution seems fair enough if youve used the approach given in your course material.

Answer 8

Got it, thanks for taking time to explain it. I was just unsure of my answer

Answer 9

:) youre welcome

Answer 10

my method is at times too exacting, so the difference between the results i wouldnt worry about