01:640:106 Lecture Notes - Lecture 13: Credit Card Interest
28 Nov 2016
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= snti/(1+i)^n: pat and sam buy a ,000 house, and have ,000 for a down payment. Thus they must take out a ,000 mortgage. They can borrow this amount from the bank at 6% annual interest, compounded monthly. Principal = ,000 total payments = . 65 x 360 = ,514. On august 16, 2016 you deposit ,000 into an account that pays 2% annual compound interest. You make a ,000 deposit every year on august 16 for the next 20 years. On what range of dates is the account balance equal to (1. 02)^4 + (1. 02)^3 + Pat and sam have been paying for 8 years, so they have 30 - 8 = 22 years left to pay. The balance on their loan is the present value of the payments they have not made yet. Balance = pv = . 65(a264t. 05 = 1798. 65(146. 3969265) = ,316. 83. Summary of procedure to nd the balance of a loan.
