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5.8 cont.)
Ex.1
When you graduate college, you buy a new car and can
afford a monthly payment of $280 per month. If you get a
special rate of 3.6% interest, compounded monthly, for 6
years, how much can you afford to borrow?
April buys a house for $200,000. She puts $15,000 down
and she gets a loan for the rest at 5.4% interest
compounded monthly for 20 years. What will her payments
be?
5.8 cont.)
Ex. 3
Amortization Schedule
A loan of $10,000 with interest rate of 10% could be repaid
in 5 equal annual payments.
What is the value of each payment?
10000
payment interest
1
2
3
4
5
principal
unpaid bal.
5.5 cont.)
Ex.4
A company that buys a piece of equipment by borrowing
$250,000 for 10 years at 6%, compounded monthly, has
monthly payments of $2778.51.
a) Find the unpaid balance after 1 year?
b) During that first year how much interest does the
company pay?