You just found the house of your dreams. The price of the house is $200,000. You have been qualified to get a mortgage loan with AAA Bank. The mortgage loan is for 20

years at an annual interest rate of 24%.

Part (A): How much are your monthly payments for the loan?

Part (B): What is the balance of the mortgage loan after 3 year(s) of payments?

Part (C): After 3 years of payments, you want to add extra money to the monthly payments so that you will be able to pay off the mortgage loan in 5 years. How much do you have to add to your previously computed monthly payments in order to accomplish this?

Components to arrive at the answer to part (A):

How many periods (the value of n) do we need to use in computing the monthly payments (PMT)?

What is the rate per period to use in solving the monthly payments for the mortgage loan?

How much is the monthly payment for the mortgage loan?

Components to arrive at the answer to part (B):

To compute the balance of the mortgage loan after 3 years, what is the value of n (number of periods) to use?

After 3 years, what is the balance of the mortgage loan?

Components to arrive at the answer to part (C):

These calculations are after you have made payments for 3 years.

What is the value of n in the calculations of the new monthly payments?

How much are the new monthly payments in order to pay off the loan in 5 years?

After 3 years of payments, you want to add extra money to the monthly payments so that you will be able to pay off the mortgage loan in 5 years. How much do you have to add to your previously computed monthly payments in order to accomplish this?