Jim and Joan Miller are borrowing $120,000 at 6.5% per annum compounded monthly for 30 years (360 months) to purchase a home. Their monthly payment is determined to be $758.48. Performance Task You need to present Jim and Joan with a report detailing the following: • A recursive formula for their balance after each monthly payment has been made. • To do this, use the formula: a = -1(1+r) - 758.48 . A determination of Jim and Joan's balance after the first payment. Don't forget the interest affecting their payment!! • Use a spreadsheet or graphing utility to create a table showing their balance after each monthly payment. • Determine when the balance will be below $75,000. • Determine when the balance will be paid off. Determine the interest expense when the loan is paid. In other words, how much of the money that they paid was just due to interest? (find the total paid, and subtract 120,000 from it). .
Jim and Joan Miller are borrowing $120,000 at 6.5% per annum compounded monthly for 30 years (360 months) to purchase a home. Their monthly payment is determined to be $758.48. Performance Task You need to present Jim and Joan with a report detailing the following: • A recursive formula for their balance after each monthly payment has been made. • To do this, use the formula: a = -1(1+r) - 758.48 . A determination of Jim and Joan's balance after the first payment. Don't forget the interest affecting their payment!! • Use a spreadsheet or graphing utility to create a table showing their balance after each monthly payment. • Determine when the balance will be below $75,000. • Determine when the balance will be paid off. Determine the interest expense when the loan is paid. In other words, how much of the money that they paid was just due to interest? (find the total paid, and subtract 120,000 from it). .
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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Question
Transcribed Image Text:Goal
To use recursive sequence to determine the amount money owed on a loan after months
Role
You are a loan officer at a mortgage company.
Audience
Jim and Joan Miller are customers applying for a mortgage.
Situation
Jim and Joan Miller are borrowing $120,000 at 6.5% per annum compounded monthly for 30 years (360 months) to purchase a home. Their monthly
payment is determined to be $758.48.
Performance Task
You need to present Jim and Joan with a report detailing the following:
• Arecursive formula for their balance after each monthly payment has been made.
• To do this, use the formula: a, = an-1 (1+r) – 758.48
A determination of Jim and Joan's balance after the first payment. Don't forget the interest affecting their payment!
• Use a spreadsheet or graphing utility to create a table showing their balance after each monthly payment.
• Determine when the balance will be below $75,000.
• Determine when the balance will be paid off.
• Determine the interest expense when the loan is paid. In other words, how much of the money that they paid was just due to interest? (find the total
paid, and subtract 120,000 from it).
Standards for Success
• You will form an accurate recursive formula.
• You will accurately determine the balance after the first payment.
• You will accurately and completely construct a chart showing balances after each monthly payment.
• You will accurately determine when the balance will be below $75,000 and when it will be paid off.
You will accurately determine the total interest expense incurred.
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