BUSINESS HIGH SCHOOL

Vanessa bought a house for $268,500. She has a 30 year mortgage with a fixed rate of 6.25%. Vanessaâs monthly payments are $1,595.85. How much was Vanessaâs down payment? a. $9,314.45
b. $16,781.25
c. $40,275.00
d. $53,040.00
Please select the best answer from the choices provided A B C D

Answers

Answer 1
Answer:

Answer:

Ans. A) $9,314.45

Explanation:

Hi, first we have to bring to present value the monthly payments to be made for 30 years (360 months). In order for this to be useful, we have to convert this annua compounded monthly rate (6.25%) to an effective rate, that is 6.25% / 12 = 0.5208%. Now, when we find this present value, we are going to substract it from the price of the house and that is the value of the down payment. But let´s just go ahead and do it together.

We have to use this formula to bring to present value the $1,595.85 monthly payments, for 30 years (360 months) at a rate of 6.25% (0.5208% monthly).

PresentValue=(A((1+r)^(n)-1) )/(r(1+r)^(n) )

It should look like this

PresentValue=(1,595.85((1+ 0.005208 )^(360)-1) )/(0.005208(1+0.005208)^(360) )

Present Value=259,185.55

Now, let´s go ahead and find the down payment.

DownPayment=Price-PresentValue

DownPayment=268,500-259,185.55= 9,314.45

So, the answer is a). $9,314.45

Best of luck.

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Answers

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Answer:

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Explanation:

You invest​ $1,000 at a variable rate of interest. Initially the rate is​ 4% compounded annually for the first​ year, and the rate increases oneminushalf of one percent annually for five years​ (year two's rate is​ 4.5%, year​ three's rate is​ 5.0%, etc.). How much will you have in the account after five​ years?

Answers

Answer:

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Explanation:

The interest rate information is given for 6 years but the question is only asking the amount after 5 years, so I only make the calculation for that.

Rate in:

  • first year: 4%
  • second year: 4.5%
  • third year: 5%
  • fourth year: 5.5%
  • fifth year: 6%

Assuming interest in compounded throughout five years, the amount you will have in your account is:

FV = 1,000 * (1 + 0.04) * (1 + 0.045) * (1 + 0.05)*  (1 + 0.055) * (1 + 0.06) = $1,276
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