Unit 4 Distingueshed Scholar Project
Schedule Computed With Fixed R
Year
Rate
Beginning Amount
Payment
Interest
1.00
7.5%
150,000.00
37,074.71
11,250.00
2.00
7.5%
124,175.29
37,074.71
9,313.15
3.00
7.5%
96,413.73
37,074.71
7,231.03
4.00
7.5%
66,570.05
37,074.71
4,992.75
5.00
7.5%
34,488.09
37,074.71
2,586.61
Total Payments =
185,373.55
Schedule Computed With an ARM
Year
Rate
Beginning Amount
Payment
Interest
1.00
6.0%
150,000.00
35,609.46
(N=5, I = 6%)
9,000.00
2.00
7.0%
123,390.54
36,428.36
(N=4, I = 7%)
8,637.34
3.00
8.0%
95,599.52
37,095.82
7,647.96
4.00
9.0%
66,151.66
37,605.16
5,953.65
5.00
10.0%
34,500.15
37,950.17
3,450.01
Total Payments =
184,688.97
*******The better deal is the variable interest rate.**********
Consider the following scenario: John buys a house for $150,000 and takes out a five year adju
makes annual payments rather than monthly payments.
Unfortunately for John, interest rates go up by 1% for each of the five years of his loan (Year 1
Year 5 is 10%).
Calculate the amount of John's payment over the life of his loan. Compare these findings if he