## Related questions with answers

Tom Ajax purchases a tiny home for his elderly mother. After a large down payment, he finances $\$88,600$ at $7\frac{1}{4}$ for $10$ years. Prepare a repayment schedule for the first two payments. (See the Example discussed before .)

$\begin{array}{ccccc} \begin{array}{}\text{Payment}\\\text{Number}\end{array}& \begin{array}{}\text{Total}\\\text{Payment}\end{array}& \begin{array}{}\text{Interest}\\\text{Payment}\end{array}& \begin{array}{}\text{Principal}\\\text{Payment}\end{array}& \begin{array}{}\text{Remaining}\\\text{Balance}\end{array}\\ \end{array}$

Solution

Verified**First, lets find out the monthly payment:**

Amount of loan = $88,600

Interest rate = 7$\frac{1}{4}$

Years = 10

Just, go the real estate amortization table and look for the year 10 also in the row of 7$\frac{1}{4}$ you will see the value **11.75**

$\begin{align*} \text{Monthly payment} &= \frac{\text{Amount of loan}}{1,000} \times 11.75\\[10pt] &= \frac{\$88,600}{1,000} \times 11.75\\[10pt] &= 88.6\times 11.75 \\[10pt] &= \$1,041.05 \end{align*}$

Hence, the monthly payment is **$1,041.05**

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