Goal

To use recursive sequence to determine the amount money owed on a loan after months

Role

You are a loan officer at a mortgage company.

Audience

Jim and Joan Miller are customers applying for a mortgage.

Situation

Jim and Joan Miller are borrowing $120,000 at 6.5% per annum compounded monthly for 30 years to purchase a home. Their monthly payment is determined to be $758.48.

Performance Task

You need to present Jim and Joan with a report detailing the following:

• A recursive formula for their balance after each monthly payment has been made.
• A determination of Jim and Joan's balance after the first payment.
• Use a spreadsheet or graphing utility to create a table showing their balance after each monthly payment.
• Determine when the balance will be below $75,000.
• Determine when the balance will be paid off.
• Determine the interest expense when the loan is paid.

Standards for Success

• You will form an accurate recursive formula.
• You will accurately determine the balance after the first payment.
• You will accurately and completely construct a chart showing balances after each monthly payment.
• You will accurately determine when the balance will be below $75,000 and when it will be paid off.
• You will accurately determine the total interest expense incurred.