Question 1119746
James purchased a home selling for $89,900 with a 15% down payment. The period
of the 
A) mortgage is 30 years, and the interest rate is 11.5% with no points. 


down payment is 15% of 89,900 = .15 * 89,900 = 13,485.


amount to be finance = 89,900 - 13,485 = 76,415.


monthly finance charge = 11.5% per year / 12 = .95833333.....%.


number of months = 30 years * 12 = 360.


payments are to be made at the end of each month.


using the online financial calculator at <a href = "https://arachnoid.com/finance/" target = "_blank">https://arachnoid.com/finance/</a>, i get:


monthly payment = $756.73


here are the results of using the financial calculator.


<img src = "http://theo.x10hosting.com/2018/071202.jpg" alt="$$$" >


inputs are:


present value = 89900 - .15 * 89900 = 76415
future value = 0
number of periods = 30 * 12 = 360 months
interest rate percent per time period = 11.5/12 = .9583333.....% per month.
payments are made at the end of each time period.


click on pmt and the calculator tells me that the payment required at the end of each month is $756.73


Determine:


B) amount of the down payment.


down payment is 15% of 89,900 = .15 * 89,900 = 134,485.


amount to be financed = 89,900 - 13,485 = 76,415.


C) monthly payment of principal and interest.


monthly payment of principal and interest is 756.73.


D) amount of the first payment applied to the principal total cost of the house


amount of the first payment applied to the principal would be:


76,415 * .115/12 = 732.31 = interest charge on remaining balance.
monthly payment = 756.73
amount applied to principal = 756.73 minus 732.31 = 24.42.


the spreadsheet shown below shows the calculations for the first few months of the loan and for the last few months of the loan.


in the beginning, most of the payment is applied to the interest.
towards the end, most of the payment is applied to the principal.


E) total interest paid


total interest paid is the sum of all the payments minus the principal.


that would be 360 * 756.73 minus 76,415 = 196,007.8


the spreadsheet shows you the month by month calculations.


you can see that the amount of the payment applied to the principal is 24.42 at the end of the first month and 749.55 at the end of the last month.


you can see that the amount of the payment applied to the interest on the remaining balance is 732.31 at the end of the first month and 7.18 at the end of the last month.


here's the spreadsheet printout.


<img src = "http://theo.x10hosting.com/2018/071203.jpg" alt="$$$" >


<img src = "http://theo.x10hosting.com/2018/071204.jpg" alt="$$$" >