SOLUTION: You decide to start investing money now so that you will have the down payment in 6 years when you are ready to purchase the home. How much should you put into a mutual fund each m

Question 1038388: You decide to start investing money now so that you will have the down payment in 6 years when you are ready to purchase the home. How much should you put into a mutual fund each month if you know you can earn 5.7%?
Money invested each month = $.
Round your answer to 2 decimal places as needed.

c) The day has finally arrived. You have saved your down payment, and are ready to purchase your $240,000 home. How much money will you be taking as a loan?
Loan amount = $.
Round your answer to 2 decimal places as needed.

d) What would the monthly mortgage payment be if your loan was a 2.6% 30-year fixed mortgage?
Monthly mortgage payment = $.

Answer by Theo(13342) (Show Source): You can put this solution on YOUR website!
the minimum down payment is 20%, so you will need to have $48,000 in 6 years.

at 5.7% per year compounded monthly, your monthly payments will be $560.7188228.

when the day arrives, you will pay your $48,000 down payment and will need to take out a $192,000 mortgage.

the monthly payments on a 30 year fixed rate mortgage for $192,000 at 2.6% per year would be equal to $768.6522461.

for the first part of this problem, you are looking to find the the annuity for a future amount with end of time period payments.

for the second part of this problem, you are looking to find the annuity for a present amount with end of time period payments

the following tutorial talks about how to solve these types of problems using either a formula or a financial calculator.

https://www.algebra.com/algebra/homework/Finance/THEO-2016-04-29.lesson
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