Compound Interest, Annuity Payment, Mortgage Financing

Anonymous
timer Asked: May 13th, 2018
account_balance_wallet $20

Question Description


  • Compound Interest

Bob bought hunting equipment for $4,800. He borrowed money from his credit union for the purchase, obtaining a loan with a 10% annual interest rate, monthly compounding, and a 3-year term. If Bob’s loan is structured as an installment loan, calculate his total installment cost, his monthly payment, and his total finance charge (interest).

  • Annuity Payment

David is saving money to open an Indian food franchise. He needs $15,000 in two years to make his down payment and is investing in an annuity yielding an annual interest rate of 7% compounded monthly. If the annuity requires that David make monthly investments, what annuity payment must David make to save $15,000?

  • Mortgage Financing

Abbie purchased a $129,000 home with 30-year term, 6% rate mortgage. At closing she paid a $10,000 down payment, requiring her to purchase private mortgage insurance (PMI) at a cost of $25 per month. Calculate Samantha’s monthly mortgage plus PMI payment.

Tutor Answer

uoscar
School: Duke University

Please, see the attached for the solution.Please, give me feedback.

Question: Compound Interest
Bob bought hunting equipment for $4,800. He borrowed money from his credit union for the
purchase, obtaining a loan with a 10% annual interest rate, monthly compounding, and a 3-year
term. If Bob’s loan is structured as an installment loan, calculate his total installment cost, his
monthly payment, and his total finance charge (interest)
Solution
Given:
Loan Amount (PV) = $4,800
Annual Interest Rate per period (r) =
Number of years = 3 years

10% 0.1
=
= 0.008333
12
12

Compounding...

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Review

Anonymous
awesome work thanks

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