Clark and Lana take a 30-year home mortgage of $122,000 at 7.4%, compounded monthly. They make their regular monthly payments for 5 years, then decide to pay $1300 per month. (a) Find their regular monthly payment. (Round your answer to the nearest cent.) $ (b) Find the unpaid balance when they begin paying the $1300. (Round your answer to the nearest cent.) $ (c) How many payments of $1300 will it take to pay off the loan? Give the answer correct to two decimal places. monthly payments (d) Use your answer to part (c) to find how much interest they save by paying

Clark and Lana take a 30-year home mortgage of $122,000 at 7.4%, compounded monthly. They make their regular monthly payments for 5 years, then decide to pay $1300 per month. (a) Find their regular monthly payment. (Round your answer to the nearest cent.) $ (b) Find the unpaid balance when they begin paying the $1300. (Round your answer to the nearest cent.) $ (c) How many payments of $1300 will it take to pay off the loan? Give the answer correct to two decimal places. monthly payments (d) Use your answer to part (c) to find how much interest they save by paying

Cornerstones of Cost Management (Cornerstones Series)

4th Edition

ISBN:9781305970663

Author:Don R. Hansen, Maryanne M. Mowen

Publisher:Don R. Hansen, Maryanne M. Mowen

Chapter19: Capital Investment

Section: Chapter Questions

Problem 8E

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Concept explainers

Cost of Credit

The cost of credit is an extra amount that the borrower has to pay besides the loan amount. These credit charges may vary from loan to loan. The cost of credit includes interest charges, maintenance charges, and arrangement charges. Some of the costs are mandatorily collected by the lender based on the loan amount and tenure of the loan. The cost of credit is also called finance charges of the credit.

Question

This problem is a complex financial problem that requires several skills, perhaps some from previous sections.

Clark and Lana take a 30-year home mortgage of $122,000 at 7.4%, compounded monthly. They make their regular monthly payments for 5 years, then decide to pay $1300 per month.

(a) Find their regular monthly payment. (Round your answer to the nearest cent.)
$

(b) Find the unpaid balance when they begin paying the $1300. (Round your answer to the nearest cent.)
$

(c) How many payments of $1300 will it take to pay off the loan? Give the answer correct to two decimal places.
monthly payments

(d) Use your answer to part (c) to find how much interest they save by paying the loan this way. (Round your answer to the nearest cent.)

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