Answer:
Step-by-step explanation:
From the given information:
The present value of the house = 128000
interest rate compounded monthly r = 7.8% = 0.078
number of months in a year n= 12
duration of time t = 30 years
To find their regular monthly payment, we have:
128000 = 138.914 P
P = 128000/138.914
P = $921.433
∴ Their regular monthly payment P = $921.433
To find the unpaid balance when they begin paying the $1400.
when they begin the payment ,
t = 30 year - 5years
t= 25 years
PV = $121718.2714
C) In order to estimate how many payments of $1400 it will take to pay off the loan, we have:
nt = 94.238 payments is required to pay off the loan.
How much interest will they save by paying the loan using the number of payments from part (c)?
The total amount of interest payed on $921.433 = 921.433 × 30(12) years
= 331715.88
The total amount paid using 921.433 and 1300 = (921.433 × 60 )+( 1300 + 94.238)
= 177795.38
The amount of interest saved = 331715.88 - 177795.38
The amount of interest saved = $153920.5