Question Description

I need an explanation for this Mathematics question to help me study.

You will have to search for your dream house, calculate the down payment, and the monthly payments for a 30 and 15 years fixed loan. You will use the loan payment formula to determine your monthly payments for a 30-year fixed loan with an APR of 3.75% and for a 15-years fix loan with an APR of 2.97% with a down payment of 5%. You will make a decision on which loan you would take and provide reasons for your choice based on comparing the monthly payment amounts and the total interest paid amounts.Grading Scale:2 points- property value with address5 points – down payment amount and the value of the loan5 points – monthly payments for 30 and 15 years3 points – conclusion5 points – reply to at least two other classmates’ posts

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Tue Jul 14 6:06:29 PM

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Module 4 discussion – Summer 2020 MATH 144 WW1 HW

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SOLUTION: Easy Math Problem – Mathematics Homework Help – Studypool

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Osama Munawar posted Jun 30, 2020 5:32 PM * Subscribe

The formula for calculating loan is:

Loan Payment (P) = Amount (A) /Discount Factor (D)

PODOBIJO CO@@ @ @ @ OTXET

D = {[(1 + r)n] – 1} / [r(1 + r)n]

Where: n=number of payment periods, r= periodic interest rate, A= total amount, and D= discount factor

30-year fix loan (n) = 30 x 12 = 360 months at an interest rate of 3.75% (0.0375), while r=0.0375

divided by 12 months a year (0.003125)

5-year fix loan (n) = 15 x 12 = 180 months at an interest rate of 2.97% (0.0297), while r = 0.0297 divided

by 12 months a year (0.002475)

Downpayment for both cases = 5% of 100,000 = (5000) Leaves each case with a debt of 95,000 USD

The 30-year plan would cost USD 439 per month which would translate to a total of {(439*360)+5000) =

163,040 USD

The 15-year plan would cost USD 646 per month which would translate to a total of {(64*180)+5000) =

121,280 USD

The difference would be that the 30-year plan would cost more by USD 41,760 making it quite expensive

despite it giving relatively cheaper repayment installments.

In my case, I would prefer the 15-year repayment plan.

The address of the home is 4857 Us Highway 231 S, Beaver Dam, KY 42320 (zillow.com)

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SOLUTION: Easy Math Problem – Mathematics Homework Help – Studypool

Module 4 discussion – Summer 2020 MATH 144 WW1 HW

+

My Dream House from Zillow: 415 E North Water St, Chicago, IL 60611

Value: $8,990,000

Down Payment: $8,990,000 x 5% = $449,500

Value of the Loan: $8,540,500

Payment for 30 Years

• Rate per Period: 0.0375 / 12 Months = 0.003125

• Number of Periods: 30 x 12 = 360

• PV: $8,540,500

• Monthly Payment: 8540500=C/.003125)*(1-(1/1.0031254360)) = $39,522.40

• Payment for 30 Years: $39,522.40 x 360 = $14,228,064

Payment for 15 Years

• Rate per Period: 0.0297/ 12 Months = 0.002475

• Number of Periods: 15 x 12 = 180

• PV: $8,540,500

• Monthly Payment: 8,540,500=C/.002475)*(1-(1/1.0024754180)) = $58,856

Payment for 15 Years: $58,856 x 180 = $10,594,080

In conclusion, I would chose the 15 Year Loan and attempt to pay it off over a shorter period of time and

with a lower interest rate.

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