As one of the loan officers for Grove Gate Bank, calculate the monthly principal and interest, PI (in $), using this table and the mont PITI (in $) for the mortgage. (Round dollars to the nearest cent.) Amount Interest Financed Rate $280,000 3.50% Term of Loan (years) 25 $ Monthly PI Annual Property Tax $6,573 Annual Insurance $2,186 $ Monthly PITI
As one of the loan officers for Grove Gate Bank, calculate the monthly principal and interest, PI (in $), using this table and the mont PITI (in $) for the mortgage. (Round dollars to the nearest cent.) Amount Interest Financed Rate $280,000 3.50% Term of Loan (years) 25 $ Monthly PI Annual Property Tax $6,573 Annual Insurance $2,186 $ Monthly PITI
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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Transcribed Image Text:As one of the loan officers for Grove Gate Bank, calculate the monthly principal and interest, PI (in $), using this table and the monthly PITI (in $) for the mortgage. (Round dollars to the nearest cent.)
| Amount Financed | Interest Rate | Term of Loan (years) | Monthly PI | Annual Property Tax | Annual Insurance | Monthly PITI |
|-----------------|---------------|----------------------|------------|---------------------|------------------|--------------|
| $280,000 | 3.50% | 25 | $ | $6,573 | $2,186 | $ |
- **Amount Financed**: $280,000
- **Interest Rate**: 3.50%
- **Term of Loan**: 25 years
- **Monthly PI (Principal and Interest)**: To be calculated
- **Annual Property Tax**: $6,573
- **Annual Insurance**: $2,186
- **Monthly PITI (Principal, Interest, Taxes, Insurance)**: To be calculated

Transcribed Image Text:The table above presents the Future Value Interest Factor (FVIF) for different interest rates and time periods. It is useful for understanding how a principal amount can grow over time at various interest rates. Here is the structure of the table:
### Columns:
1. **Interest Rate (%)**:
- Ranges from 3.50% to 13.00%, increasing in increments of 0.25%.
2. **Time Periods** (Years):
- Includes 5, 10, 15, 20, 25, 30, 35, and 40 years.
### Rows:
Each row corresponds to a specific interest rate and each column within that row indicates the future value factor for different time periods.
### Example Entries:
- At an interest rate of **3.50%** for **5 years**, the future value factor is **18.19**.
- At an interest rate of **8.00%** for **20 years**, the future value factor is **9.56**.
- At an interest rate of **12.00%** for **30 years**, the future value factor is **11.72**.
### Application:
This table is typically used in finance to calculate the compounding effect of an investment over time. By multiplying the principal amount by the respective future value factor, one can determine the future value of that investment at the specified interest rate and time horizon.
### Observations:
- As the interest rate increases, the future value factor also increases, reflecting higher growth due to compounding.
- Longer time periods generally lead to higher future value factors, indicating the impact of compound interest over time.
This information aids in investment planning, retirement savings calculations, and understanding the effects of compound interest.
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