The price of a condominium is $179,000. The bank requires a 5% down payment and one point at the time of closing. The cost of the condominium is financed with a 30-year fixed-rate mortgage at 6.5%. Use the following formula to determine the regular payment amount.
[tex]PMT=\frac{P\left(\frac{r}{n}\right)}{\left[1-\left(1+\frac{r}{n}\right)^{-nt}\right]}[/tex]
a. Find the required down payment.
Answer (2)
Calculate the down payment by multiplying the price of the condominium by the down payment percentage.
The price of the condominium is $179,000 and the down payment percentage is 5% (0.05).
Multiply $179,000 by 0.05 to get the down payment amount.
The required down payment is $8950 .
Explanation
Understanding the Problem We need to find the required down payment for a condominium priced at $179,000, given that the bank requires a 5% down payment.
Calculating the Down Payment To find the down payment, we need to calculate 5% of the total price of the condominium. This can be done by multiplying the price of the condominium by the down payment percentage.
Performing the Calculation The down payment is calculated as follows: Do w n P a y m e n t = P r i ce o f C o n d o mini u m × Do w n P a y m e n t P erce n t a g e Do w n P a y m e n t = $179 , 000 × 0.05 Do w n P a y m e n t = $8950
Stating the Final Answer Therefore, the required down payment is $8950.
Examples
Let's say you want to buy a car that costs $25,000, and the dealership requires a 10% down payment. Calculating the down payment is similar to the condominium problem. You would multiply the price of the car ($25,000) by the down payment percentage (0.10). This gives you a down payment of $2,500. Understanding how to calculate down payments is crucial in many real-life scenarios, such as purchasing a home, a car, or other significant assets, as it helps you determine the initial amount of money you need to have available.
The required down payment for the condominium priced at $179,000 with a 5% down payment is $8,950. This is calculated by multiplying the price of the condominium by the down payment percentage. Thus, the formula used is Down Payment = Price × Down Payment Percentage.
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