Respuesta :
a movie star purchased a home costing $708,815. he put 20% down and signed a note for monthly payments at 9% interest for 4 years, $110283 is the amount of each monthly payment and the total amount of interest paid on the loan.
What is interest period?
Interest Term refers to the period from this Agreement's Effective Date through its Initial Maturity Date, during which the Lender will provide Loan Advances in line with its terms and conditions.
A time frame specified by the borrower under the terms of the loan agreement during which a variable interest rate, such as LIBOR, is set for some of the loans made by the borrower.
Given that,
interest rate per period (i)= 0.09/12
number of periods (n) = 4 × 12 =48
loan amount = present value of future monthly payments
= monthly payments × [{1 - (1 + i)⁻ⁿ}/ i]
or, monthly payments × [{1 - (1 + i)⁻ⁿ}/ i] = 708,815 × (1 - 0.2)
or, monthly payments × [{1 - (1 + 0.09/12 )⁻⁴⁸}/ 0.09/12] = 708,815 × (1 - 0.2)
or, monthly payments × (40.1847) = 567052
or, monthly payments = $14111
Interest period = $14111 × 48 - [708,815 × (1 - 0.2)]
Interest period = $ (677335 - 567052)
Interest period = $110283
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