Question

Jeff recently purchased a house for $350,000. He made a down payment of $50,000 and financed the balance over 30 years at 7%. If Jeff 's first payment is due on March 1st of the current year, how much interest expense will Jeff pay in the current year

Answer 1

Answer: $17,434.43

Explanation:

First find the amount that he financed by a loan:

= Purchase price - Down payment

= 350,000 - 50,000

= $300,000

Find the annuity payment using the excel PMT formula:

Rate = 7% / 12 months

Number of periods = 30 * 12 months = 360 months

Present value = -300,000

Future value = 0

Annuity = $1,995.91

Then the schedule is attached.