You want to buy a $170000 home. You plan to pay $34000 as a down payment, and take out a 20 year loan at 4.5% interest for the rest. After 14 years, you decide to pay off the entire loan. a) What is the amount of the payment? b) What is the outstanding principal after 14 years? c) If the bank charges 3.5 points on the loan, what is the amount charged for points? d) If the bank charges 3.5 points on the loan, what is the true interest rate?
You want to buy a $170000 home. You plan to pay $34000 as a down payment, and take out a 20 year loan at 4.5% interest for the rest. After 14 years, you decide to pay off the entire loan. a) What is the amount of the payment? b) What is the outstanding principal after 14 years? c) If the bank charges 3.5 points on the loan, what is the amount charged for points? d) If the bank charges 3.5 points on the loan, what is the true interest rate?
Chapter19: Lease And Intermediate-term Financing
Section: Chapter Questions
Problem 14P
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You want to buy a $170000 home. You plan to pay $34000 as a down payment, and take out a 20 year loan at 4.5% interest for the rest. After 14 years, you decide to pay off the entire loan.
a) What is the amount of the payment?
b) What is the outstanding principal after 14 years?
c) If the bank charges 3.5 points on the loan, what is the amount charged for points?
d) If the bank charges 3.5 points on the loan, what is the true interest rate?
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