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A young couple buying their first home borrow $65,000 for 30 years at 7.4%, compounded monthly,...

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Basic Math

A young couple buying their first home borrow $65,000 for 30years at 7.4%, compounded monthly, and make payments of $450.05.After 5 years, they are able to make a one-time payment of $2000along with their 60th payment.

(a) Find the unpaid balance immediately after they pay the extra$2000 and their 60th payment. (Round your answer to the nearestcent.) $

(b) How many regular payments of $450.05 will amortize theunpaid balance from part (a)? (Round your answer to the nearestwhole number.) -this answer is in payments not $

(c) How much will the couple save over the life of the loan bypaying the extra $2000? (Use your answer from part (b). Round youranswer to the nearest cent.) the answer is not  2395.

Answer & Explanation Solved by verified expert
4.2 Ratings (809 Votes)
aThe formula used to calculate the fixed monthly payment P required to fully amortize a loan of L dollars over a term of n months at a monthly interest rate of r is P Lr1 rn1 rn 1 Here L65000 r741200376000and n3012360Therefore P65000 376000 137600036013760003601 6537691447780578144778057    See Answer
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