Required information

[The following information applies to the questions displayed below.]

NOTE: Throughout this lab, every time a screenshot is requested, use your computer's screenshot tool, and paste each screenshot to thesameWord document. Label each screenshot in accordance to what is noted in the lab. This document with all of the screenshots included should be uploaded through Connect as a Word or PDF document when you have reached the final step of the lab.

Required:

1. Calculate the monthly payment for a 15-year and a 6-year mortgage loan.

2. Calculate the amount of interest that you'd pay for a 15-year mortgage loan and a 6-year mortgage loan.

Ask the Question:How much interest do you pay over the life of a 15-year and a 6-year mortgage?

Master the Data:There is no data file for this lab. We will make the needed calculations and input the data as we go.

To compute the mortgage payments, we'll need to know a few things:

1. The size of the mortgage loan
2. The interest rate
3. The length of the loan (number of months)

Let's suppose you would like to buy a home for $250,000. But like most U.S. citizens, you don't have enough cash on hand to pay for the full house. But we're in luck! Signature Bank has agreed to offer you a 30-year mortgage loan, but requires that you pay 20 percent down ($50,000 = 20% of $250,000) to qualify for their mortgage loan of $200,000 in this way:

$250,000Cost of home50,000Required 20% down payment ($50,000 = 20% of $250,000) (Thecash you need to have available to pay when closing on the home)$200,000Amount of the bank loan

Software needed

• Excel
• Screen capture tool (Windows: Snipping Tool; Mac: Cmd+Shift+4)

Perform the Analysis:Refer to Lab 1-3 Alternative in the text for instructions and Lab 1-3 steps for each of the lab parts.

Share the Story:Accountants need to know how much of each monthly mortgage (or bond) payment goes toward interest.

Part 1:Upload Your Files

Part 2:Assessment

Required:

1. What would be the monthly payment for 180 months, 6% annual interest and a $200,000 loan?

• $1,199.10
• $1,064.48
• $3,314.58
• $1,687.71

2. What would be the monthly payment for 72 months, 6% annual interest and a $200,000 loan?

• $1,199.10
• $1,064.48
• $1,687.71
• $3,314.58

3. For the 180-month mortgage, what is the amount that goes toward paying down principal in monthly payment number 20?

• $931.64
• $752.31
• $756.07
• $759.04

4. For the 72-month mortgage, what is the amount of interest expense in monthly payment number 3?

• $976.80
• $965.11
• $2,337.78
• $993.11

5. What is the total amount of interest paid over the life of the 180-month mortgage?

• $238,649.59
• $103,788.46
• $38,649.59
• $303,788.46