Jamie purchased a condo in Naples, Florida, for $699,000. She put 20% down and financed the rest at 5% for 35 years. What are Ja

Question

9966 [12]

3 years ago

15

Jamie purchased a condo in Naples, Florida, for $699,000. She put 20% down and financed the rest at 5% for 35 years. What are Ja

mie's total finance charges?

Mathematics

1 answer:

EleoNora [17] · Answer 1 · 2022-08-12T00:23:30+03:00

The payments are ...
A = P(r/n)/(1 -(1+r/n)^(-nt))
where P is the principal amount, $699,000*0.80 = $559,200
r is the annual interest rate, 0.05
n is the number of compoundings per year, 12
t is the number of years.
Then
A = 559,200*(0.05/12)/(1 -(1 +0.05/12)^(-12*35)) = 2822.21

The total of 420 of these payments is $1,185,328.20, which is $626,128.20 more than the loan amount.

Jamie's total finance charge is about $626,128.20.

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There is always some minor adustment required in the amount of the last payment. That has not been taken into account here.