Loan Payments

You can afford a $700 per month mortgage payment. You've found a 30-year loan at 5.5% APR.

1. How big of a loan can you afford?

2. How much total money will you pay the loan company?

3. How much of that money is interest?

Marie can afford a $250 per month car payment. She's found a 5-year loan at 7% APR.

1. How expensive of a car can she afford?

2. How much total money will she pay the loan company?

3. How much of that money is interest?

You want to buy a $25,000 car. The company is offering an interest rate of 2% APR for 48 months (4 years). What will your monthly payments be?

You want to buy a $200,000 home. You plan to pay 10% as a down payment and take out a 30-year loan for the rest.

1. How much is the loan amount going to be?

2. What will your monthly payments be if the interest rate is 5%?

3. What will your monthly payments be if the interest rate is 6%?

Emile bought a car for $24,000 three years ago. The loan had a 5-year term at 3% APR. How much does he still owe on the car?

A friend bought a house 15 years ago, taking out a $120,000 mortgage at 6% APR for 30 years. How much does she still owe on the mortgage?

Use a spreadsheet (not formulas) to answer problems 9 through 13 below.

Imagine you have $20,000 saved as a down payment on a house. You wish to take out a fixed-rate 30-year mortgage loan at 4% APR (remember that mortgage rates usually assume monthly compounding). If the maximum mortgage payment you can afford is $950 per month, then what is the maximum house price that you can afford?

Use a spreadsheet (not formulas) to answer problems 9 through 13 below.

Suppose another mortgage lender offers you a fixed-rate 15-year mortgage at 2.95% APR. You have $20,000 saved as a down payment, and you can afford a maximum mortgage payment of $950 per month. You are interested in a certain house for sale, with firm selling price of $200,000.

1. Find the monthly payment for this house. Can you af…

Use a spreadsheet (not formulas) to answer problems 9 through 13 below.

An annuity firm pays 5% APR compounded yearly, and offers an investor the following: Deposit $100,000 with them today, and then starting one year from today, you will receive ten equal annual payments, with zero balance remaining afterward in the account. If an investor accepts their offer, then find the following:

1. What will be…

Use a spreadsheet (not formulas) to answer problems 9 through 13 below.

For twelve full years, and into an account that pays 3.5% APR compounded quarterly: Yanhong will either pay $1500 at the end of each calendar quarter, or, deposit a single lump sum that will give the same future value amount.

1. If Yanhong chooses the single lump sum option, then how much will Yanhong need to deposit?

2. If Yanhong nee…

Use a spreadsheet (not formulas) to answer problems 9 through 13 below.

Assume you take out a 30-year mortgage loan for $250,000 at a fixed 4.5% APR.

1. What will be the amount of your monthly payment?

2. After the first ten years of payments, how much will remain on your loan balance?

3. After the first twenty years of payments, how much will remain on your loan balance?

4. Notice that the amount of the loan bala…

For each of the following scenarios, determine which formula from sections 2.2-2.4 to use and solve the problem.

Keisha received an inheritance of $20,000 and invested it at 6.9% APR, compounded continuously. How much will she have for college in 8 years?

For each of the following scenarios, determine which formula from sections 2.2-2.4 to use and solve the problem.

Paul wants to buy a new car. Rather than take out a loan, he decides to save $200 a month in an account earning 3.5% APR compounded monthly. How much will he have saved up after 3 years?

For each of the following scenarios, determine which formula from sections 2.2-2.4 to use and solve the problem.

Sol is managing investments for a non-profit company. They want to invest some money in an account earning 5% APR compounded annually with the goal to have $30,000 in the account in 6 years. How much should Sol deposit into the account?

For each of the following scenarios, determine which formula from sections 2.2-2.4 to use and solve the problem.

Miao is going to finance new office equipment at 2.8% APR over a 4-year term. If she can afford monthly payments of $100, how much equipment can she buy?

For each of the following scenarios, determine which formula from sections 2.2-2.4 to use and solve the problem.

How much would you need to save every month in an account earning 4.1% APR to have $5,000 saved up in two years.

For each of the following scenarios, determine which formula from sections 2.2-2.4 to use and solve the problem.

Terry and Jess are buying a house for $405,000 and they can afford to put 10% down. Their interest rate is 4.3% APR for 30 years. What will their monthly mortgage payment be?

For each of the following scenarios, determine which formula from sections 2.2-2.4 to use and solve the problem.

You loan your sister $500 for two years and she agrees to pay you back with 3% simple interest per year. How much will she pay you back

For each of the following scenarios, determine which formula from sections 2.2-2.4 to use and solve the problem.

Zahid starts saving $150 per month in an account that pays 4.8% APR compounded monthly. If he continues for 20 years, how much will he have? If he waited 10 years instead and put in $300 per month for 10 years with the same interest, how much would he have?