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Unformatted text preview: MA170 Week 9 Report: Other Annuities; Determining the Interest Rate Name: Lab: Fall 2010 1. [11 marks ] A house is purchased for $285 000. A down payment equal to 10% of the purchase price is made, and a 25year mortgage is obtained for the remaining amount. The mortgage is to be amortized over 25 years, and the mortgage rate is 4% compounded semiannually. (a) Determine both the amount of the mortgage payment and the total interest that will be paid, if payments are made weekly. & 1 + : 04 2 2 = & 1 + j 52 52 52 ) j 52 52 = (1 : 02) 1 = 52 & 1 : = 0 : 000761930 R = A a n j i = 285000(0 : 9) " 1 & (1 + 0 : 000761930) & 25(52) : 000761930 # : = 256500 824 : 8425647 : = $310 : 97 Total interest paid: I : = 25 (52) (310 : 97) & 256500 = $147761 (b) Suppose the buyer can afford to make weekly payments of $350, and agrees that the &nal payment will be of irregular size if necessary. Assume that the &nal payment will be a smaller concluding payment, (a drop payment). (i) Determine the total amount of time it will now take to pay off the entire mortgage in years, months and weeks. ( Do not &nd the value of the drop payment.) Eqn of value: 256500 = 350 1 & (1 + 0 : 000761930) & n : 000761930 !...
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 Fall '11
 F.Vinette
 Math

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