5. Illustrating Amortization. Heather McIntosh of Watertown, South Dakota, recently purchased a home for $190,000. She put $25,000 down and took out a 25-year loan at 5.5 percent interest. a. Use Table 9-4 on page 285 to determine her monthly payment. b. How much of her first payment will go toward interest and principal and how much will she owe after that first month? c. How much will she owe after three months. Hint: Use the logic of Table 9-2 on page 283.

Table 9.4 Estimating Mortgage Loan Payments for Principal and Interest (Monthly Payment per $1,000 Borrowed) 15 30 Interest Rate (%) 3.0 Payment Period (Years) 20 25 $5.5460 $4.7421 5.7996 5.0062 $6.9058 $4.2160 3.5 7.1488 4.4904 4.0 6.0598 5.2783 4.7742 7.3969 7.6499 4.5 6.3265 5.5583 5.0669 5.0 7.9079 6.5996 5.8459 5.3682 5.5 8.1708 6.8789 5.6779 6.1409 6.4430 6.0 8.4386 7.1643 5.9955 8.7111 7.4557 6.5 7.0 6.3207 6.6530 8.9883 6.7521 7.0678 7.3899 7.7530 8.0559 7.5 9.2701 6.9921 8.0 9.5565 8.3644 7.7182 7.3376 Table 9-2 Amortization Effects of Monthly Payment of $978.03 on a $200,000, 30-Year Mortgage Loan at 4.2 Percent First Month = Second Month = $200,000 x 4.2% x 1/12 = $700.00 Interest payment $978.03 700.00 = $278.03 Principal repayment $200,000 278.03 $199,721.97 Balance due $199,800.90 x 4.2% X 1/12 $699.02 Interest payment $978.03 699.02 $279.01 Principal repayment $199,721.97 279.01 $199,442.96 Balance due $199,442.96 X 4.2% X 1/12 $698.05 Interest payment $978.03 698.05 $279.98 Principal repayment $199,442.96 279.98 $199,162.98 Balance due = Third Month =