Forty-eight (48) months ago, James Alfred Charles purchased a$2,750,000 house in Buckhead with no money down (i.e. he borrowed$2,750,000). The interest rate on his 30-year, monthly payment loanwas 6.25 percent. For the first 48 months of the loan, James paidtwice the normal required payment (for example, if the requiredpayment to pay off the loan in 30 years was $4000 per month, Jamesactually paid $8000 per month, with all excess being appliedagainst the principle balance). Now, James is thinking aboutdownsizing and he would like to know how much equity he hasaccumulated in his home. Unfortunately, the market value of hishome has depreciated by 30 percent over the past 4 years (thus,James can only sell his house today for $1,925,000). Assuming thatJames made all of his monthly payments (i.e., twice the requiredamount) on time and assuming that he can sell his house today(i.e., immediately after making his 48th monthly payment) for$1,925,000, how much equity can James Alfred Charles expect to takeout of his home? (Note: for this problem, to achieve as precise ananswer as possible, round all intermediate calculations – payment,interest rate, N, etc. to a minimum of 4 decimal places).
