Purchase Solution

# Buying a house and making monthly payments

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1) You want to buy a house and wish to borrow \$300,000. What would the monthly payment be if the loan requires equal monthly payments for 30 years at an interest rate of 5% of apr. What would your outstanding loan balance be immediately after you make your first payment?

2) You are panning on how much you need to save for retirement. You expect to live for 30 years in retirement and would like to spend \$100,000 (in real terms) per year, while leaving a \$1 million bequest to UCLA when you die at the end of the 30th year. You are 35 years away from retirment. How much do you need to save at the end of the 30th year. you are 35 years away from retirement. How much do you need to save a tthe end of each year if you earn 5% real (after-inflastion) during your working years and 3% during your retirement yeas? Solve the problem in three different ways:
a. With a financial calculator
c. Using the formulas for the present value of an annuity and for a loan payment

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The expert examines buying a house and making monthly payments.

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1) You want to buy a house and wish to borrow \$300,000. What would the monthly payment be if the loan requires equal monthly payments for 30 years at an interest rate of 5% of apr? What would your outstanding loan balance be immediately after you make your first payment?
Loan amount \$300,000 (A)
Duration 30 (B)
Compounding 12 (C)
Interest rate 5% (D)
Monthly payments \$1,610 =A/((1 - ((1 + (D/C)^(-B * C)))/(D/C))

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• B. Sc., University of Nigeria
• M. Sc., London South Bank University
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