Algebra Problems

[chris9641]

1) If you can save $1800 a month and invest it in an account earning 6.4%.compounded monthly,how long will it take to have enough for a 20% down payment on an $180,000 condo?


2) If you purchase a $400,000 house with a 30-year mortgage at 7.5%, compounded monthly, what would be your monthly payment? What is the total amount you would pay over the 30 years? How much interest would you pay?

 

[Peter]

Welcome to Anandtech.

This isn't Highly Technical, it's homework. Please read the rules. Thank you.

 

[Cogman]

1)
Pe^(rt) = C (or something like that)
1800 * e ^ ( 0.064 * t months) = .20 * 180,000
.064 * t months = ln (20)
t = ln (20) / .064

solve from there.

Problem 2 is more of the same, you will have to varify my 1 answer as I am not sure I plugged the right numbers into the right places.

BTW Peter was correct in saying this is not a homework forum, you will have better luck posting these types of questions in Off topic (This thread will probably be locked)

[edit correcting]

That would be if you where not earning an addition 1800 per month, so to REALLY do this problem it would be

1800 * e ^ (0.064 * t) = 36000 - 1800t
0.064 t = ln (20 - t)
t ln t = ln(20) / 0.064 <- my math fails here, I don't know how to make this into just terms of t, so I used a calculator.

Anyways, I got about 16.6 months, though that could be off. Im not sure that I needed that 1800 in front of the first e, so the answer could be off by a month or so.

 

[gorobei]

I just used a spreadsheet to sum up #1. Kinda fun really. Took about half a minute to setup.

Isn't interest pre-calculated into most fixed rate mortgages at the start so that you just have some monthly that fits your budget and they tell you how long of a mortgage you're looking at? Or is this one of those questions that show you how bad longer term mortgages are than short term?

Anyway, would you really trust any answer you got here? I could give you intentionally wrong answers to teach you a lesson. Plus, don't you need to show how you got the answer?

 

[earthman]

Using an interest calculator, I get the following:

$400,000 at 7.5 over 30 years = $2796.86 per month, total interest paid is $606,866.84

For the second one I get 14 months.

 

[Mark R]

1. Use the compound interest equation:

M = monthly payment
x = Monthly interest rate multiplier, so 12% effective p.a. interest rate gives x=1.01
n = number of months
T = total capital

T = (1 - x ^ (n+1) ) / (1 - x)

Solve for n, such that T > the desired amount

2. Same thing as above. Except x is < 1 as the capital depreciates.

 

[bendixG15]

Showoffs __

 

[Onund]

Originally posted by: gorobei
Plus, don't you need to show how you got the answer?

File->print

 

[lousydood]

Algebra doesn't involve numbers.

 

[rocadelpunk]

Originally posted by: lousydood
Algebra doesn't involve numbers.

:beer:

 

[DrPizza]

1. Is the $180,000 condo going to be the same price when you have 20% of that value?

2. This isn't highly technical - I'm moving it to OT.