Problem 6

Upon graduation and after getting you first job, you are feeling wealthy and you decide to buy a house. The real estate agent says you can afford it. However, real estate agents always say that, even when it is grossly untrue! Therefore, you would like to estimate your payments once you buy the house.

The house costs $300,000 and you want to know the payments for a mortgage. Assuming an interest rate of 5% and a down payment of $10,000 (an assuming that you can find a bank willing to do this deal???)

What are the monthly payments for a 30 year mortgage.

Present Value of Mortgage = $__________________

Number of Payments = _______

Interest Rate 5%/12 = _______%

In this case, you know P, and what you want is A

A/P = ____________

Payment = ___________________