Which is the most efficient way to solve this equation?
2 answers:
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Answer:
(a)$5805.21
(b)Least Expensive Mortgage =$120640.59
Most Expensive Mortgage =$152032.77
Step-by-step explanation:
The future value of an ordinary annuity with deposits P made regularly k times each year for n years, with interest compounded times k per year at an annual rate r, is given as:
The Pirerra's Monthly Payments=$140
Annual Rate =9.5%
Therefore: Monthly Rate=0.095/12
Years, n=3
Period, k=12
(b)For the Johnsons, Present value of Mortgage is derived using the formula:
At $1000 Monthly payment
Adding a down payment of $16000
- Least Expensive Mortgage = 104640.59+16000=$120640.59
At $1300 Monthly Payment
Adding a down payment of $16000
- Most Expensive Mortgage = 136032.77+16000=$152032.77