1. Your friends just bought a new house for $450,000. They put 20% down and probably got an interest rate of 5.5% on their 30 year simple interest amortized loan. a. What is their monthly payment? b. What is the total amount paid for the house at the end of the loan?
Unitary Method
The word “unitary” comes from the word “unit”, which means a single and complete entity. In this method, we find the value of a unit product from the given number of products, and then we solve for the other number of products.
Speed, Time, and Distance
Imagine you and 3 of your friends are planning to go to the playground at 6 in the evening. Your house is one mile away from the playground and one of your friends named Jim must start at 5 pm to reach the playground by walk. The other two friends are 3 miles away.
Profit and Loss
The amount earned or lost on the sale of one or more items is referred to as the profit or loss on that item.
Units and Measurements
Measurements and comparisons are the foundation of science and engineering. We, therefore, need rules that tell us how things are measured and compared. For these measurements and comparisons, we perform certain experiments, and we will need the experiments to set up the devices.
![**Problem:**
Your friends just bought a new house for $450,000. They put 20% down and probably got an interest rate of 5.5% on their 30-year simple interest amortized loan.
a. What is their monthly payment?
b. What is the total amount paid for the house at the end of the loan?
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**Explanation:**
- **Down Payment Calculation:**
- A 20% down payment on a $450,000 house means they paid $90,000 upfront.
- Loan amount = $450,000 - $90,000 = $360,000.
- **Loan Details:**
- Principal = $360,000
- Interest Rate = 5.5%
- Loan Term = 30 years
- **Monthly Payment Calculation:**
- Use the formula for an amortized loan:
\[
M = \frac{P \times r \times (1 + r)^n}{(1 + r)^n - 1}
\]
- \( P \) = Principal loan amount ($360,000)
- \( r \) = Monthly interest rate (5.5% annual, so 5.5/12/100)
- \( n \) = Total number of payments (30 years \(\times\) 12 months = 360)
- **Total Payment Calculation:**
- Total paid over the loan term = Monthly payment \(\times\) Total number of payments
This offers an understanding of how mortgage loans work and how to calculate payments over time.](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F199c7314-0602-454d-8cb1-bd7542ff2956%2Ff6042aab-e6ad-4bae-a0ad-650efe462cc8%2F0jx3bzm_processed.jpeg&w=3840&q=75)
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