You have a mortgage of $125,600.00 at a 4.95% APR. You make a payment of $1500.00 each month. What is your principal Balance at
the beginning of the third month?
1 answer:
This sort of problem is most easily worked using a financial calcualtor or app. Attached is the result of using the financial app available on a TI-84 calculator for finding future value. The arguments to the function are ...
... N — number of payments: 3
... I — annual interest rate (%): 4.95
... PV — present value: the value of the loan, 125,600
... PMT — payment amount: -1500. The sign is negative because this is money we're paying out
... P/Y — payments per year: 12 (payment is monthly)
... C/Y — compounding per year: 12 (interest is compounded monthly)
After 3 payments, the balance is $122,642.13.
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The '68-95-99.7' rule says
-About 68% of values fall within one standard deviation of the mean.
-About 95% of the values fall within two standard deviations from the mean.
-Almost all of the values — about 99.7% — fall within three standard deviations from the mean.
Here
Therefore, the probability
The required probability