You are buying a new home for $416 000. You have an agreement with the savings and loan company to borrow the needed money if you pay 20 percent in cash and monthly payments for 30 years at an interest rate of 4.15 percent compounded monthly.
(a) What monthly payments will be required?
(b) How much principal reduction will occur in the first payment?
(c) Prepare a spreadsheet that will show each payment, how much of each will go to principal and how much to interest, the current balance, and the cumulative interest paid.
(d) Repeat steps (a), (b), and (c) for interest rates of 3.75, 4.00, 4.25, 4.50, 4.75 and 5.00 percent. Work as a team if approved by your instructor.
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