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Author Question: You just bought a home for 250,000 and are scheduled to make monthly payments of 1,834.41 for 30 ... (Read 101 times)

penza

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on: Jul 10, 2018
You just bought a home for 250,000 and are scheduled to make monthly payments of 1,834.41 for 30 years at 8 APR. Suppose you add 400 each month to the 1,834.41 house payment, making your monthly payment 2,234.41.
 
  This extra amount is applied to the principal. How long will it take you to pay off your loan of 250,000? Use a calculator to determine your answer.
  A) It will take about 206 months.
  B) It will take about 216 months.
  C) It will take about 15.5 years.
  D) It will take about 16.5 years.

Question 2

________ is an annuity with an infinite life making continual annual payments.
 
  A) Amortized loan
  B) Principal
  C) Perpetuity
  D) APR


SeanoH09

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Reply #1 on: Jul 10, 2018
Answer to Question 1

Answer: A
Explanation: A) With Mode of P/Y = 12 and C/Y = 12, I/Y = 8, PV = 250,000, PMT = -2,234.41, and FV = 0, we get n = 206.19 months or 17.18 years.

Answer to Question 2

C


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