4.

If the interest rate on a 30-year mortgage is at 5% per year when the Hall’s purchase their
house, how much will their mortgage (monthly) payment be? Ignore insurance and taxes.

Cost of House 140,000.00

Down Payment 14,000.00
Mortgage 126,000.00
 
rate 5%/12
PMT rate 0.42%
r(1+r)n
PMT = P
(1+r)n-1
.0042*(1+.0042)360
PMT = 126,000.00
(1+.0042)360-1
0.02
PMT = 126,000.00
3.52

PMT = 126,000.00 0.01

PMT = 676.40
Marty and Laura’s monthly payment for their 30-year mortgage is 676.40

5. Construct an amortization schedule for the 5%, 30-year mortgage.

Interest = Beginning Balance / 12 months x 5%
MONTH BEGINNING BALANCE PAYMENT INTEREST (5%) PRINCIPAL ENDING BALANCE
1
Principal Payment126,000.00
= Payment – Interest(676.40) 525.00 151.40 125,848.60
2 125,848.60 (676.40) 524.37 152.03 125,696.58
Ending
3 Balance = Beginning
125,696.58Balance – Principal
(676.40) 523.74 152.66 125,543.92
4
Payment: 676.40 125,543.92 (676.40) 523.10 153.30 125,390.62
5 125,390.62 (676.40) 522.46 153.94 125,236.69
6 125,236.69 (676.40) 521.82 154.58 125,082.11
7 125,082.11 (676.40) 521.18 155.22 124,926.89
8 124,926.89 (676.40) 520.53 155.87 124,771.03
9 124,771.03 (676.40) 519.88 156.52 124,614.51
10 124,614.51 (676.40) 519.23 157.17 124,457.34
11 124,457.34 (676.40) 518.57 157.83 124,299.52
12 124,299.52 (676.40) 517.91 158.49 124,141.04
13 124,141.04 (676.40) 517.25 159.15 123,981.90
14 123,981.90 (676.40) 516.59 159.81 123,822.09
15 123,822.09 (676.40) 515.93 160.47 123,661.62
16 123,661.62 (676.40) 515.26 161.14 123,500.49
17 123,500.49 (676.40) 514.59 161.81 123,338.68
18 123,338.68 (676.40) 513.91 162.49 123,176.19
19 123,176.19 (676.40) 513.23 163.17 123,013.03
20 123,013.03 (676.40) 512.55 163.85 122,849.19
21 122,849.19 (676.40) 511.87 164.53 122,684.67
22 122,684.67 (676.40) 511.19 165.21 122,519.46
23 122,519.46 (676.40) 510.50 165.90 122,353.56
24 122,353.56 (676.40) 509.81 166.59 122,186.97
25 122,186.97 (676.40) 509.11 167.29 122,019.69
26 122,019.69 (676.40) 508.42 167.98 121,851.71
27 121,851.71 (676.40) 507.72 168.68 121,683.03
28 121,683.03 (676.40) 507.01 169.39 121,513.65
29 121,513.65 (676.40) 506.31 170.09 121,343.56
30 121,343.56 (676.40) 505.60 170.80 121,172.76
31 121,172.76 (676.40) 504.89 171.51 121,001.25
32 121,001.25 (676.40) 504.17 172.23 120,829.03
33 120,829.03 (676.40) 503.45 172.95 120,656.09
34 120,656.09 (676.40) 502.73 173.67 120,482.43
35 120,482.43 (676.40) 502.01 174.39 120,308.04
36 120,308.04 (676.40) 501.28 175.12 120,132.93
37 120,132.93 (676.40) 500.55 175.85 119,957.09
38 119,957.09 (676.40) 499.82 176.58 119,780.51
39 119,780.51 (676.40) 499.09 177.31 119,603.20
40 119,603.20 (676.40) 498.35 178.05 119,425.16
41 119,425.16 (676.40) 497.60 178.80 119,246.37
42 119,246.37 (676.40) 496.86 179.54 119,066.83
43 119,066.83 (676.40) 496.11 180.29 118,886.55
44 118,886.55 (676.40) 495.36 181.04 118,705.51
45 118,705.51 (676.40) 494.61 181.79 118,523.72
46 118,523.72 (676.40) 493.85 182.55 118,341.18
47 118,341.18 (676.40) 493.09 183.31 118,157.87
48 118,157.87 (676.40) 492.32 184.08 117,973.80
49 117,973.80 (676.40) 491.56 184.84 117,788.96
50 117,788.96 (676.40) 490.79 185.61 117,603.35
51 117,603.35 (676.40) 490.01 186.39 117,416.97
52 117,416.97 (676.40) 489.24 187.16 117,229.81
53 117,229.81 (676.40) 488.46 187.94 117,041.88
54 117,041.88 (676.40) 487.67 188.73 116,853.16
55 116,853.16 (676.40) 486.89 189.51 116,663.65
56 116,663.65 (676.40) 486.10 190.30 116,473.35
57 116,473.35 (676.40) 485.31 191.09 116,282.26
58 116,282.26 (676.40) 484.51 191.89 116,090.38
59 116,090.38 (676.40) 483.71 192.69 115,897.69
60 115,897.69 (676.40) 482.91 193.49 115,704.20
61 115,704.20 (676.40) 482.10 194.30 115,509.91
62 115,509.91 (676.40) 481.29 195.11 115,314.80
 63 115,314.80 (676.40) 480.48 195.92 115,118.89
64 115,118.89 (676.40) 479.66 196.74 114,922.15
65 114,922.15 (676.40) 478.84 197.56 114,724.60
66 114,724.60 (676.40) 478.02 198.38 114,526.22
67 114,526.22 (676.40) 477.19 199.21 114,327.02
68 114,327.02 (676.40) 476.36 200.04 114,126.99
69 114,126.99 (676.40) 475.53 200.87 113,926.12
70 113,926.12 (676.40) 474.69 201.71 113,724.42
71 113,724.42 (676.40) 473.85 202.55 113,521.88
72 113,521.88 (676.40) 473.01 203.39 113,318.49
73 113,318.49 (676.40) 472.16 204.24 113,114.25
74 113,114.25 (676.40) 471.31 205.09 112,909.17
75 112,909.17 (676.40) 470.45 205.95 112,703.23
76 112,703.23 (676.40) 469.60 206.80 112,496.43
77 112,496.43 (676.40) 468.74 207.66 112,288.77
78 112,288.77 (676.40) 467.87 208.53 112,080.24
79 112,080.24 (676.40) 467.00 209.40 111,870.85
80 111,870.85 (676.40) 466.13 210.27 111,660.58
81 111,660.58 (676.40) 465.25 211.15 111,449.44
82 111,449.44 (676.40) 464.37 212.03 111,237.42
83 111,237.42 (676.40) 463.49 212.91 111,024.51
84 111,024.51 (676.40) 462.60 213.80 110,810.72
85 110,810.72 (676.40) 461.71 214.69 110,596.04
86 110,596.04 (676.40) 460.82 215.58 110,380.46
87 110,380.46 (676.40) 459.92 216.48 110,163.98
88 110,163.98 (676.40) 459.02 217.38 109,946.60
89 109,946.60 (676.40) 458.11 218.29 109,728.32
90 109,728.32 (676.40) 457.20 219.20 109,509.12
91 109,509.12 (676.40) 456.29 220.11 109,289.02
92 109,289.02 (676.40) 455.37 221.03 109,067.99
93 109,067.99 (676.40) 454.45 221.95 108,846.05
94 108,846.05 (676.40) 453.53 222.87 108,623.18
95 108,623.18 (676.40) 452.60 223.80 108,399.38
96 108,399.38 (676.40) 451.66 224.74 108,174.65
97 108,174.65 (676.40) 450.73 225.67 107,948.98
98 107,948.98 (676.40) 449.79 226.61 107,722.37
99 107,722.37 (676.40) 448.84 227.56 107,494.82
100 107,494.82 (676.40) 447.90 228.50 107,266.32
101 107,266.32 (676.40) 446.94 229.46 107,036.87
102 107,036.87 (676.40) 445.99 230.41 106,806.46
103 106,806.46 (676.40) 445.03 231.37 106,575.09
104 106,575.09 (676.40) 444.06 232.34 106,342.76
105 106,342.76 (676.40) 443.09 233.31 106,109.46
106 106,109.46 (676.40) 442.12 234.28 105,875.18
107 105,875.18 (676.40) 441.15 235.25 105,639.94
108 105,639.94 (676.40) 440.17 236.23 105,403.71
109 105,403.71 (676.40) 439.18 237.22 105,166.49
110 105,166.49 (676.40) 438.19 238.21 104,928.29
111 104,928.29 (676.40) 437.20 239.20 104,689.10
112 104,689.10 (676.40) 436.20 240.20 104,448.91
113 104,448.91 (676.40) 435.20 241.20 104,207.72
114 104,207.72 (676.40) 434.20 242.20 103,965.52
115 103,965.52 (676.40) 433.19 243.21 103,722.31
116 103,722.31 (676.40) 432.18 244.22 103,478.10
117 103,478.10 (676.40) 431.16 245.24 103,232.86
118 103,232.86 (676.40) 430.14 246.26 102,986.60
119 102,986.60 (676.40) 429.11 247.29 102,739.32
120 102,739.32 (676.40) 428.08 248.32 102,491.00
121 102,491.00 (676.40) 427.05 249.35 102,241.65
122 102,241.65 (676.40) 426.01 250.39 101,991.26
123 101,991.26 (676.40) 424.96 251.44 101,739.83
124 101,739.83 (676.40) 423.92 252.48 101,487.35
125 101,487.35 (676.40) 422.86 253.54 101,233.82
126 101,233.82 (676.40) 421.81 254.59 100,979.23
127 100,979.23 (676.40) 420.75 255.65 100,723.59
128 100,723.59 (676.40) 419.68 256.72 100,466.87
129 100,466.87 (676.40) 418.61 257.79 100,209.09
130 100,209.09 (676.40) 417.54 258.86 99,950.23
131 99,950.23 (676.40) 416.46 259.94 99,690.29
132 99,690.29 (676.40) 415.38 261.02 99,429.28
133 99,429.28 (676.40) 414.29 262.11 99,167.17
134 99,167.17 (676.40) 413.20 263.20 98,903.97
135 98,903.97 (676.40) 412.10 264.30 98,639.68
136 98,639.68 (676.40) 411.00 265.40 98,374.28
137 98,374.28 (676.40) 409.89 266.51 98,107.78
138 98,107.78 (676.40) 408.78 267.62 97,840.16
139 97,840.16 (676.40) 407.67 268.73 97,571.44
140 97,571.44 (676.40) 406.55 269.85 97,301.59
141 97,301.59 (676.40) 405.42 270.98 97,030.62
142 97,030.62 (676.40) 404.29 272.11 96,758.51
143 96,758.51 (676.40) 403.16 273.24 96,485.28
144 96,485.28 (676.40) 402.02 274.38 96,210.91
145 96,210.91 (676.40) 400.88 275.52 95,935.39
146 95,935.39 (676.40) 399.73 276.67 95,658.73
147 95,658.73 (676.40) 398.58 277.82 95,380.91
148 95,380.91 (676.40) 397.42 278.98 95,101.93
149 95,101.93 (676.40) 396.26 280.14 94,821.80
150 94,821.80 (676.40) 395.09 281.31 94,540.49
151 94,540.49 (676.40) 393.92 282.48 94,258.02
152 94,258.02 (676.40) 392.74 283.66 93,974.36
153 93,974.36 (676.40) 391.56 284.84 93,689.53
154 93,689.53 (676.40) 390.37 286.03 93,403.50
155 93,403.50 (676.40) 389.18 287.22 93,116.29
156 93,116.29 (676.40) 387.98 288.42 92,827.88
157 92,827.88 (676.40) 386.78 289.62 92,538.27
158 92,538.27 (676.40) 385.58 290.82 92,247.45
159 92,247.45 (676.40) 384.36 292.04 91,955.42
160 91,955.42 (676.40) 383.15 293.25 91,662.17
161 91,662.17 (676.40) 381.93 294.47 91,367.70
162 91,367.70 (676.40) 380.70 295.70 91,072.00
163 91,072.00 (676.40) 379.47 296.93 90,775.08
164 90,775.08 (676.40) 378.23 298.17 90,476.91
165 90,476.91 (676.40) 376.99 299.41 90,177.50
166 90,177.50 (676.40) 375.74 300.66 89,876.85
167 89,876.85 (676.40) 374.49 301.91 89,574.94
168 89,574.94 (676.40) 373.23 303.17 89,271.77
169 89,271.77 (676.40) 371.97 304.43 88,967.34
170 88,967.34 (676.40) 370.70 305.70 88,661.64
171 88,661.64 (676.40) 369.42 306.98 88,354.67
172 88,354.67 (676.40) 368.14 308.26 88,046.42
173 88,046.42 (676.40) 366.86 309.54 87,736.89
174 87,736.89 (676.40) 365.57 310.83 87,426.06
175 87,426.06 (676.40) 364.28 312.12 87,113.94
176 87,113.94 (676.40) 362.97 313.43 86,800.52
177 86,800.52 (676.40) 361.67 314.73 86,485.79
178 86,485.79 (676.40) 360.36 316.04 86,169.76
179 86,169.76 (676.40) 359.04 317.36 85,852.40
180 85,852.40 (676.40) 357.72 318.68 85,533.72
181 85,533.72 (676.40) 356.39 320.01 85,213.72
182 85,213.72 (676.40) 355.06 321.34 84,892.38
183 84,892.38 (676.40) 353.72 322.68 84,569.71
184 84,569.71 (676.40) 352.37 324.03 84,245.68
185 84,245.68 (676.40) 351.02 325.38 83,920.31
186 83,920.31 (676.40) 349.67 326.73 83,593.58
187 83,593.58 (676.40) 348.31 328.09 83,265.50
188 83,265.50 (676.40) 346.94 329.46 82,936.04
189 82,936.04 (676.40) 345.57 330.83 82,605.21
190 82,605.21 (676.40) 344.19 332.21 82,273.01
191 82,273.01 (676.40) 342.80 333.60 81,939.41
192 81,939.41 (676.40) 341.41 334.99 81,604.43
193 81,604.43 (676.40) 340.02 336.38 81,268.06
194 81,268.06 (676.40) 338.62 337.78 80,930.28
195 80,930.28 (676.40) 337.21 339.19 80,591.09
196 80,591.09 (676.40) 335.80 340.60 80,250.49
197 80,250.49 (676.40) 334.38 342.02 79,908.48
198 79,908.48 (676.40) 332.95 343.45 79,565.03
199 79,565.03 (676.40) 331.52 344.88 79,220.16
200 79,220.16 (676.40) 330.08 346.32 78,873.85
201 78,873.85 (676.40) 328.64 347.76 78,526.09
202 78,526.09 (676.40) 327.19 349.21 78,176.89
203 78,176.89 (676.40) 325.74 350.66 77,826.23
204 77,826.23 (676.40) 324.28 352.12 77,474.11
205 77,474.11 (676.40) 322.81 353.59 77,120.52
206 77,120.52 (676.40) 321.34 355.06 76,765.47
207 76,765.47 (676.40) 319.86 356.54 76,408.93
208 76,408.93 (676.40) 318.37 358.03 76,050.90
209 76,050.90 (676.40) 316.88 359.52 75,691.38
210 75,691.38 (676.40) 315.38 361.02 75,330.37
211 75,330.37 (676.40) 313.88 362.52 74,967.85
212 74,967.85 (676.40) 312.37 364.03 74,603.82
213 74,603.82 (676.40) 310.85 365.55 74,238.28
214 74,238.28 (676.40) 309.33 367.07 73,871.21
215 73,871.21 (676.40) 307.80 368.60 73,502.61
216 73,502.61 (676.40) 306.26 370.14 73,132.47
217 73,132.47 (676.40) 304.72 371.68 72,760.80
218 72,760.80 (676.40) 303.17 373.23 72,387.57
219 72,387.57 (676.40) 301.61 374.79 72,012.79
220 72,012.79 (676.40) 300.05 376.35 71,636.45
221 71,636.45 (676.40) 298.49 377.91 71,258.54
222 71,258.54 (676.40) 296.91 379.49 70,879.06
223 70,879.06 (676.40) 295.33 381.07 70,497.99
224 70,497.99 (676.40) 293.74 382.66 70,115.34
225 70,115.34 (676.40) 292.15 384.25 69,731.09
226 69,731.09 (676.40) 290.55 385.85 69,345.24
227 69,345.24 (676.40) 288.94 387.46 68,957.78
228 68,957.78 (676.40) 287.32 389.08 68,568.71
229 68,568.71 (676.40) 285.70 390.70 68,178.02
230 68,178.02 (676.40) 284.08 392.32 67,785.70
231 67,785.70 (676.40) 282.44 393.96 67,391.74
232 67,391.74 (676.40) 280.80 395.60 66,996.15
233 66,996.15 (676.40) 279.15 397.25 66,598.90
234 66,598.90 (676.40) 277.50 398.90 66,200.00
235 66,200.00 (676.40) 275.83 400.57 65,799.44
236 65,799.44 (676.40) 274.16 402.24 65,397.21
237 65,397.21 (676.40) 272.49 403.91 64,993.30
238 64,993.30 (676.40) 270.81 405.59 64,587.71
239 64,587.71 (676.40) 269.12 407.28 64,180.43
240 64,180.43 (676.40) 267.42 408.98 63,771.46
241 63,771.46 (676.40) 265.71 410.69 63,360.78
242 63,360.78 (676.40) 264.00 412.40 62,948.38
243 62,948.38 (676.40) 262.28 414.12 62,534.27
244 62,534.27 (676.40) 260.56 415.84 62,118.44
245 62,118.44 (676.40) 258.83 417.57 61,700.87
246 61,700.87 (676.40) 257.09 419.31 61,281.56
247 61,281.56 (676.40) 255.34 421.06 60,860.51
248 60,860.51 (676.40) 253.59 422.81 60,437.70
249 60,437.70 (676.40) 251.82 424.58 60,013.12
250 60,013.12 (676.40) 250.05 426.35 59,586.78
251 59,586.78 (676.40) 248.28 428.12 59,158.67
252 59,158.67 (676.40) 246.49 429.91 58,728.77
253 58,728.77 (676.40) 244.70 431.70 58,297.07
254 58,297.07 (676.40) 242.90 433.50 57,863.58
255 57,863.58 (676.40) 241.10 435.30 57,428.29
256 57,428.29 (676.40) 239.28 437.12 56,991.18
257 56,991.18 (676.40) 237.46 438.94 56,552.24
258 56,552.24 (676.40) 235.63 440.77 56,111.48
259 56,111.48 (676.40) 233.80 442.60 55,668.89
260 55,668.89 (676.40) 231.95 444.45 55,224.44
261 55,224.44 (676.40) 230.10 446.30 54,778.15
262 54,778.15 (676.40) 228.24 448.16 54,330.00
263 54,330.00 (676.40) 226.37 450.03 53,879.98
264 53,879.98 (676.40) 224.50 451.90 53,428.08
265 53,428.08 (676.40) 222.62 453.78 52,974.30
266 52,974.30 (676.40) 220.73 455.67 52,518.63
267 52,518.63 (676.40) 218.83 457.57 52,061.07
268 52,061.07 (676.40) 216.92 459.48 51,601.59
269 51,601.59 (676.40) 215.01 461.39 51,140.20
270 51,140.20 (676.40) 213.08 463.32 50,676.89
271 50,676.89 (676.40) 211.15 465.25 50,211.65
272 50,211.65 (676.40) 209.22 467.18 49,744.47
273 49,744.47 (676.40) 207.27 469.13 49,275.35
274 49,275.35 (676.40) 205.31 471.09 48,804.26
275 48,804.26 (676.40) 203.35 473.05 48,331.22
276 48,331.22 (676.40) 201.38 475.02 47,856.20
277 47,856.20 (676.40) 199.40 477.00 47,379.21
278 47,379.21 (676.40) 197.41 478.99 46,900.23
279 46,900.23 (676.40) 195.42 480.98 46,419.25
280 46,419.25 (676.40) 193.41 482.99 45,936.27
281 45,936.27 (676.40) 191.40 485.00 45,451.27
282 45,451.27 (676.40) 189.38 487.02 44,964.26
283 44,964.26 (676.40) 187.35 489.05 44,475.22
284 44,475.22 (676.40) 185.31 491.09 43,984.13
285 43,984.13 (676.40) 183.27 493.13 43,491.01
286 43,491.01 (676.40) 181.21 495.19 42,995.82
287 42,995.82 (676.40) 179.15 497.25 42,498.58
288 42,498.58 (676.40) 177.08 499.32 41,999.26
289 41,999.26 (676.40) 175.00 501.40 41,497.86
290 41,497.86 (676.40) 172.91 503.49 40,994.37
291 40,994.37 (676.40) 170.81 505.59 40,488.79
292 40,488.79 (676.40) 168.70 507.70 39,981.10
293 39,981.10 (676.40) 166.59 509.81 39,471.29
294 39,471.29 (676.40) 164.46 511.94 38,959.36
295 38,959.36 (676.40) 162.33 514.07 38,445.29
296 38,445.29 (676.40) 160.19 516.21 37,929.09
297 37,929.09 (676.40) 158.04 518.36 37,410.73
298 37,410.73 (676.40) 155.88 520.52 36,890.21
299 36,890.21 (676.40) 153.71 522.69 36,367.53
300 36,367.53 (676.40) 151.53 524.87 35,842.66
301 35,842.66 (676.40) 149.34 527.06 35,315.61
302 35,315.61 (676.40) 147.15 529.25 34,786.36
303 34,786.36 (676.40) 144.94 531.46 34,254.91
304 34,254.91 (676.40) 142.73 533.67 33,721.25
305 33,721.25 (676.40) 140.51 535.89 33,185.36
306 33,185.36 (676.40) 138.27 538.13 32,647.23
307 32,647.23 (676.40) 136.03 540.37 32,106.87
308 32,106.87 (676.40) 133.78 542.62 31,564.25
309 31,564.25 (676.40) 131.52 544.88 31,019.37
310 31,019.37 (676.40) 129.25 547.15 30,472.23
311 30,472.23 (676.40) 126.97 549.43 29,922.80
312 29,922.80 (676.40) 124.68 551.72 29,371.08
313 29,371.08 (676.40) 122.38 554.02 28,817.07
314 28,817.07 (676.40) 120.07 556.33 28,260.74
315 28,260.74 (676.40) 117.75 558.65 27,702.10
316 27,702.10 (676.40) 115.43 560.97 27,141.13
317 27,141.13 (676.40) 113.09 563.31 26,577.82
318 26,577.82 (676.40) 110.74 565.66 26,012.17
319 26,012.17 (676.40) 108.38 568.02 25,444.16
320 25,444.16 (676.40) 106.02 570.38 24,873.78
 321 24,873.78 (676.40) 103.64 572.76 24,301.02
322 24,301.02 (676.40) 101.25 575.15 23,725.88
323 23,725.88 (676.40) 98.86 577.54 23,148.35
324 23,148.35 (676.40) 96.45 579.95 22,568.40
325 22,568.40 (676.40) 94.04 582.36 21,986.04
326 21,986.04 (676.40) 91.61 584.79 21,401.25
327 21,401.25 (676.40) 89.17 587.23 20,814.03
328 20,814.03 (676.40) 86.73 589.67 20,224.36
329 20,224.36 (676.40) 84.27 592.13 19,632.23
330 19,632.23 (676.40) 81.80 594.60 19,037.64
331 19,037.64 (676.40) 79.32 597.08 18,440.57
332 18,440.57 (676.40) 76.84 599.56 17,841.01
333 17,841.01 (676.40) 74.34 602.06 17,238.95
334 17,238.95 (676.40) 71.83 604.57 16,634.38
335 16,634.38 (676.40) 69.31 607.09 16,027.30
336 16,027.30 (676.40) 66.78 609.62 15,417.68
337 15,417.68 (676.40) 64.24 612.16 14,805.53
338 14,805.53 (676.40) 61.69 614.71 14,190.82
339 14,190.82 (676.40) 59.13 617.27 13,573.56
340 13,573.56 (676.40) 56.56 619.84 12,953.72
341 12,953.72 (676.40) 53.97 622.43 12,331.30
342 12,331.30 (676.40) 51.38 625.02 11,706.28
343 11,706.28 (676.40) 48.78 627.62 11,078.66
344 11,078.66 (676.40) 46.16 630.24 10,448.43
345 10,448.43 (676.40) 43.54 632.86 9,815.57
346 9,815.57 (676.40) 40.90 635.50 9,180.07
347 9,180.07 (676.40) 38.25 638.15 8,541.93
348 8,541.93 (676.40) 35.59 640.81 7,901.12
349 7,901.12 (676.40) 32.92 643.48 7,257.65
350 7,257.65 (676.40) 30.24 646.16 6,611.49
351 6,611.49 (676.40) 27.55 648.85 5,962.65
352 5,962.65 (676.40) 24.84 651.56 5,311.10
353 5,311.10 (676.40) 22.13 654.27 4,656.83
354 4,656.83 (676.40) 19.40 657.00 3,999.84
355 3,999.84 (676.40) 16.67 659.73 3,340.11
356 3,340.11 (676.40) 13.92 662.48 2,677.63
357 2,677.63 (676.40) 11.16 665.24 2,012.39
358 2,012.39 (676.40) 8.38 668.02 1,344.38
359 1,344.38 (676.40) 5.60 670.80 673.59
360 673.59 (676.40) 2.81 673.59 -

TOTAL INTEREST 117,502.29

FUTURE VALUE = 140,000 + 177,502.29 = 257,502.29
 With the equal monthly payment of 676.40 for the period of 360 months its total interest is
177,502.29. Thus, they would end up paying 257,502.29 after 30 years for a house.

6. If the Halls want to have as much of an after-tax income when they retire as they currently have, and
assuming they live until they are 80 years old, how much money should they set aside each month so as
to have enough money accumulated in their retirement nest egg? Assume that annual inflation rate is 4%
per year for the whole term, the investment return is 8% per year before and after retirement, and that
their tax rate is 28% throughout their life.

Marty 50,000
Laura 25,000
Combined salary 75,000

Combined salary 75,000

Tax (28%) 21,000
After tax income 54,000

Inflation rate 4%
Investment yield 8%

Retirement age 65
Current age 30
Number of years until retirement 35

Expected life span 80

Retirement age 65
Number of expected years after
retirement 15

Annual Income Desired

= PV * (1+R)n
During Retirement
Annual Income Desired
= 54,000 * (1+4%)35
During Retirement
Annual Income Desired
= 213,088.81
During Retirement
Age PV PV Factor 8% Income Needed
65 213,088.81
66 221,612.36 0.92593 205,197.53
67 230,476.85 0.85734 197,597.02
68 239,695.93 0.79383 190,277.82
69 249,283.76 0.73503 183,231.04
70 259,255.11 0.68058 176,443.85
71 269,625.32 0.63017 169,909.79
72 280,410.33 0.58349 163,616.62
73 291,626.74 0.54027 157,557.18
74 303,291.81 0.50025 151,721.73
75 315,423.49 0.46319 146,101.00
76 328,040.43 0.42888 140,689.98
77 341,162.04 0.39711 135,478.86
78 354,808.53 0.36770 130,463.09
79 369,000.87 0.34046 125,630.03
80 383,760.90 0.31524 120,976.79
2,394,892.34

FV

PMT =
(1+r)n-1
( )
r

2,394,892.34

PMT =
(1+.0067)420-1
( )
0.0067

2,394,892.34

PMT =
15.29
( )
0.0067

2,394,892.34

PMT =

2,282.47
 PMT = 1,049.25

The couple will have to save $1,049.25 monthly for the next 35 years in order for them
to have a $213,088.81 savings on their retirement age.