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A borrower has taken out a 30-year mortgage for $104,000 at an annual rate of 12%. a. Use the table to find the monthly payment for this mortgage. b. Construct the first three lines of an amortization schedule for this mortgage. c. Assume that the borrower has decided to pay an extra $200 per month to pay off the mort more quickly. Find the first three lines of your payment schedule under this assumption.

A borrower has taken out a 30-year mortgage for $104,000 at an annual rate of 12%. a. Use the table to find the monthly payment for this mortgage. b. Construct the first three lines of an amortization schedule for this mortgage. c. Assume that the borrower has decided to pay an extra $200 per month to pay off the mort more quickly. Find the first three lines of your payment schedule under this assumption.

Essentials Of Investments
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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### Monthly Payment on a $1,000 Loan This table illustrates the monthly payment amount for a $1,000 loan based on different annual interest rates and loan terms. The values are represented in U.S. dollars. | Annual Interest Rate | 3 Years | 4 Years | 10 Years | 20 Years | 30 Years | |----------------------|---------|---------|----------|----------|----------| | 4% | $29.53 | $22.58 | $10.12 | $6.06 | $4.77 | | 5% | $29.97 | $23.03 | $10.61 | $6.60 | $5.37 | | 6% | $30.42 | $23.49 | $11.10 | $7.16 | $6.00 | | 8% | $31.34 | $24.41 | $12.13 | $8.36 | $7.34 | | 10% | $32.27 | $25.36 | $13.22 | $9.65 | $8.78 | | 12% | $33.21 | $26.33 | $14.35 | $11.01 | $10.29 | ### Explanation: - **Annual Interest Rate**: The percentage of the principal charged by the lender for the use of its money annually. - **Number of Years for the Loan**: Time period over which the loan is scheduled to be paid back. - **Monthly Payment**: The monthly amount that needs to be paid to the lender to repay the loan over the given time period and interest rate. The table shows that, as the interest rate increases or as the number of years increases, the monthly payment amount also typically increases. This information is crucial for understanding and planning loan payments effectively.
Transcribed Image Text:### Monthly Payment on a $1,000 Loan This table illustrates the monthly payment amount for a $1,000 loan based on different annual interest rates and loan terms. The values are represented in U.S. dollars. | Annual Interest Rate | 3 Years | 4 Years | 10 Years | 20 Years | 30 Years | |----------------------|---------|---------|----------|----------|----------| | 4% | $29.53 | $22.58 | $10.12 | $6.06 | $4.77 | | 5% | $29.97 | $23.03 | $10.61 | $6.60 | $5.37 | | 6% | $30.42 | $23.49 | $11.10 | $7.16 | $6.00 | | 8% | $31.34 | $24.41 | $12.13 | $8.36 | $7.34 | | 10% | $32.27 | $25.36 | $13.22 | $9.65 | $8.78 | | 12% | $33.21 | $26.33 | $14.35 | $11.01 | $10.29 | ### Explanation: - **Annual Interest Rate**: The percentage of the principal charged by the lender for the use of its money annually. - **Number of Years for the Loan**: Time period over which the loan is scheduled to be paid back. - **Monthly Payment**: The monthly amount that needs to be paid to the lender to repay the loan over the given time period and interest rate. The table shows that, as the interest rate increases or as the number of years increases, the monthly payment amount also typically increases. This information is crucial for understanding and planning loan payments effectively.
### Mortgage Calculation Exercise A borrower has taken out a 30-year mortgage for $104,000 at an annual rate of 12%. **Tasks:** a. **Find Monthly Payment** - Use the table to determine the monthly payment for this mortgage. b. **Amortization Schedule** - Construct the first three lines of an amortization schedule for this mortgage. c. **Additional Payment Scenario** - Assume the borrower decides to pay an extra $200 per month to pay off the mortgage more quickly. Find the first three lines of your payment schedule under this assumption. ### Instructions 1. **Monthly Payment Calculation** - Access the table by clicking the icon to view monthly payments on a $1,000 loan. - Enter the monthly payment amount in the provided box. - Type your answer as an integer or a decimal. 2. **Entering Answers** - Input your calculated answer in the answer box. - Click "Check Answer" to submit your response. > Note: This exercise covers a total of 6 parts. Complete each section by utilizing provided resources and instructions. **Additional Tools:** - A table of monthly payments is available for reference, aiding in calculating and verifying the monthly payments. This exercise is designed to reinforce concepts related to mortgage calculations and the impact of additional payments on loan schedules.
Transcribed Image Text:### Mortgage Calculation Exercise A borrower has taken out a 30-year mortgage for $104,000 at an annual rate of 12%. **Tasks:** a. **Find Monthly Payment** - Use the table to determine the monthly payment for this mortgage. b. **Amortization Schedule** - Construct the first three lines of an amortization schedule for this mortgage. c. **Additional Payment Scenario** - Assume the borrower decides to pay an extra $200 per month to pay off the mortgage more quickly. Find the first three lines of your payment schedule under this assumption. ### Instructions 1. **Monthly Payment Calculation** - Access the table by clicking the icon to view monthly payments on a $1,000 loan. - Enter the monthly payment amount in the provided box. - Type your answer as an integer or a decimal. 2. **Entering Answers** - Input your calculated answer in the answer box. - Click "Check Answer" to submit your response. > Note: This exercise covers a total of 6 parts. Complete each section by utilizing provided resources and instructions. **Additional Tools:** - A table of monthly payments is available for reference, aiding in calculating and verifying the monthly payments. This exercise is designed to reinforce concepts related to mortgage calculations and the impact of additional payments on loan schedules.
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