Matt Wolf
Annuity: a fixed sum of money paid to someone/bank each year.
• Examples: Retirement Plans, Mortgage Loans, Student Loans, and Car Payments
Types of Annuities:
• Present Value: You are borrowing money now and paying it back over time later.
• Future Value: You are putting money away now and saving it for a later use.
Present Value: [pic]
Pre-Calculus/Trigonometry3 Name: ____________________________
Present Annuities
Notes Sheet
Annuity: a fixed sum of money paid to someone/bank each year.
• Examples: Retirement Plans, Mortgage Loans, Student Loans, and Car Payments
Types of Annuities:
• Present Value: You are borrowing money now and paying it back over time later.
• Future Value: You are putting money away now and saving it for a later use.
Present Value: [pic]
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[pic]
1. Jeremy purchased a house for $157,000. He paid an 18% down payment. He gets a 25 year mortgage with an interest rate of 8.9%.
a. How much was his down payment?
b. How much of the house is financed?
c. What is his monthly payment for principal and interest?
d. How much will the house cost him in total?
e. How much will he pay in total interest over the life of the loan?
2. A monthly mortgage payment consists of an amount paid towards the principal (loan balance) and the interest on the loan. It may also contain an amount for the property taxes (school, county, municipality) that the mortgage holder will pay from an escrow (A financial document held by a third party on behalf of the other two parties in a transaction) and an amount for insurance that protects the mortgage holder in case of default on the loan. When he purchased his house in 2011, Eric took out a 30-year mortgage for $230,000 with a fixed interest rate of 6.375%.
a. What will be the monthly payment for the principal and interest?
b. After 30 years, how much money will Eric have paid to his mortgage lender?
c. How much interest did he end up paying his mortgage lender?
[pic]
1. Jeremy purchased a house for $157,000. He paid an 18% down payment. He gets a 25 year mortgage with an interest rate of 8.9%.
a. How much was his down payment?
b. How much of the house is financed?
c. What is his monthly payment for principal and interest?
d. How much will the house cost him in total?
e. How much will he pay in total interest over the life of the loan?
2. A monthly mortgage payment consists of an amount paid towards the principal (loan balance) and the interest on the loan. It may also contain an amount for the property taxes (school, county, municipality) that the mortgage holder will pay from an escrow (A financial document held by a third party on behalf of the other two parties in a transaction) and an amount for insurance that protects the mortgage holder in case of default on the loan. When he purchased his house in 2011, Eric took out a 30-year mortgage for $230,000 with a fixed interest rate of 6.375%.
a. What will be the monthly payment for the principal and interest?
b. After 30 years, how much money will Eric have paid to his mortgage lender?
c. How much interest did he end up paying his mortgage lender?
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