document.write( "<A HREF=/cgi-bin/jump-to-question.mpl?question=1041259>Question 1041259</A>: <I><SPAN STYLE=\"word-break: break-all;\"> I need help with part A and B.\r<BR>\n" );
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document.write( "12.  The Smiths are refinancing their home mortgage to a 15-year loan at 5.25% annual interest compounded monthly.  Their outstanding balance on the loan is $95,000.<BR>\n" );
document.write( "a)  Under their current loan, the Smiths’ monthly mortgage payment is $1104.  How much will the Smiths be saving in their monthly mortgage payments by refinancing? (Round your answer to the nearest dollar.)\r<BR>\n" );
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document.write( "b)  How much interest will the Smiths pay over the life of the new loan?<BR>\n" );
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document.write( "</I><HR><TABLE width=100%><TR><TD><B><A HREF=http://www.algebra.com/>Algebra.Com's</A> Answer #656449 by </B><A HREF=/tutors/aboutme.mpl?userid=Theo><B>Theo(13342)</B></A><img src=\"/images/stars/stars-13.gif\" alt=\"\" >&nbsp;<A HREF=/tutors/aboutme.mpl?userid=Theo><IMG SRC=http://www.algebra.com/images/aboutme-small.gif BORDER=0 alt=\"About Me\" VALIGN=MIDDLE></A>&nbsp;<IMG SRC=http://www.algebra.com/cgi-bin/show-face.mpl?user=Theo><BR>You can <A HREF=\"/cgi-bin/embed-solution.mpl?show=1&solution=656449\">put this solution on YOUR website!</A><BR><SPAN STYLE=\"word-break: break-all;\"> 12. The Smiths are refinancing their home mortgage to a 15-year loan at 5.25% annual interest compounded monthly. Their outstanding balance on the loan is $95,000.\r<BR>\n" );
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document.write( "a) Under their current loan, the Smiths’ monthly mortgage payment is $1104. How much will the Smiths be saving in their monthly mortgage payments by refinancing? (Round your answer to the nearest dollar.) \r<BR>\n" );
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document.write( "the new loan is 15 years at 5.25% apr compounded monthly.<BR>\n" );
document.write( "apr = annual percentage rate<BR>\n" );
document.write( "outstanding balance on the old loan is 95,000.<BR>\n" );
document.write( "the new loan is for 95,000.<BR>\n" );
document.write( "the interest rate per time period = 5.25% / 12 = .4375% per month.<BR>\n" );
document.write( "the number of time periods = 15*12 = 180 months.\r<BR>\n" );
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document.write( "using the online financial calculator, enter the following:<BR>\n" );
document.write( "Present Value = -95000<BR>\n" );
document.write( "Future Value = 0<BR>\n" );
document.write( "Number of Periods = 180<BR>\n" );
document.write( "Interest Rate per period, % = .4375<BR>\n" );
document.write( "Payment At = End<BR>\n" );
document.write( "click on pmt and the calculator will tell you that the monthly payment is 763.68<BR>\n" );
document.write( "round this to 764.\r<BR>\n" );
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document.write( "your old payment per month is 1104.<BR>\n" );
document.write( "subtract 764 from that to get 1104 - 764 = 340.\r<BR>\n" );
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document.write( "you saved 340 per month by refinancing.\r<BR>\n" );
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document.write( "b) How much interest will the Smiths pay over the life of the new loan?\r<BR>\n" );
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document.write( "they made 180 payments of 764 each for a total of 137520.\r<BR>\n" );
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document.write( "the amount of the loan was 95000.\r<BR>\n" );
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document.write( "the total interest paid was therefore 137520 - 95000 = 42520.\r<BR>\n" );
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document.write( "note that the monthly payment was really 763.68<BR>\n" );
document.write( "this is already rounded to the nearest penny.<BR>\n" );
document.write( "the actual number from another financial calculator i use would have been 763.6838297.<BR>\n" );
document.write( "you then rounded this to the nearest dollar which was 764.<BR>\n" );
document.write( "you then used the rounded number to calculator the total payments made.<BR>\n" );
document.write( "if you had used the 763.68 rather than the 764, the total payments would have been 137462.4 which would then have been rounded to 137462.<BR>\n" );
document.write( "137462 - 95000 = 42462.<BR>\n" );
document.write( "your answer would be different depending on what number you used.<BR>\n" );
document.write( "i have no idea what number they are looking for you to use when calculating total interest.<BR>\n" );
document.write( "i would have used 763.68, but they may have wanted you to use 764.<BR>\n" );
document.write( "this is something you might need to ask your instructor about.\r<BR>\n" );
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document.write( "in the tutorial, the formula you would want to use would be:<BR>\n" );
document.write( "ANNUITY FOR A PRESENT AMOUNT WITH END OF TIME PERIOD PAYMENTS<BR>\n" );
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