document.write( "<A HREF=/cgi-bin/jump-to-question.mpl?question=1075940>Question 1075940</A>: <I><SPAN STYLE=\"word-break: break-all;\"> Supposed you have just obtained a 30-year home mortgage in this amount of $216,000 at an APR of 4.5%<BR>\n" );
document.write( "A) Find the required monthly payment<BR>\n" );
document.write( "B) Find the monthly payment that you would need to make in order to pay off the loan in 20 years. <BR>\n" );
document.write( "C) How much would you save in interest charges by paying off the loan in 20 years as opposed to 30 years? </SPAN>\n" );
document.write( "</I><HR><TABLE width=100%><TR><TD><B><A HREF=http://www.algebra.com/>Algebra.Com's</A> Answer #690589 by </B><A HREF=/tutors/aboutme.mpl?userid=jorel1380><B>jorel1380(3719)</B></A><img src=\"/images/stars/stars-13.gif\" alt=\"\" >&nbsp;<A HREF=/tutors/aboutme.mpl?userid=jorel1380><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=jorel1380><BR>You can <A HREF=\"/cgi-bin/embed-solution.mpl?show=1&solution=690589\">put this solution on YOUR website!</A><BR><SPAN STYLE=\"word-break: break-all;\"> A)The following formula is used to calculate the fixed monthly payment (P) required to fully amortize a loan of L dollars over a term of n months at a monthly interest rate of c. [If the quoted rate is 6%, for example, c is .06/12 or .005].<BR>\n" );
document.write( "P = L[c(1 + c)^n]/[((1 + c)^n)) - 1].<BR>\n" );
document.write( "So, we have:<BR>\n" );
document.write( "P=216000((.00375*(1+.00375)^360))/((1+.00375)^360)-1)))<BR>\n" );
document.write( "P=216000(0.01442886768736313153815180601079/(2.847698049963501743507148269543)<BR>\n" );
document.write( "P=216000(0.00506685309825880826287390636924)=$1094.44 as the required monthly payment.<BR>\n" );
document.write( "B)Using the same formula as last time, we have:<BR>\n" );
document.write( "P=216000((.00375*(1+.00375)^240))/((1+.00375)^360)-1)<BR>\n" );
document.write( "P=216000 (0.00632649376219962420615722743331)<BR>\n" );
document.write( "P=$1366.52 as the monthly payment.<BR>\n" );
document.write( "C)Savings in interest would be:<BR>\n" );
document.write( "(1094.44*360)-(1366.53*240)=$66032.96 in savings. &#9786;&#9786;&#9786;&#9786; </SPAN>\n" );
document.write( "</TD></TR></TABLE>\n" );