Jamie and Eddie are buying an apartment for $320,000. Their loan officer tells them that their principal will decrease by 4.5% every year if they make the minimum mortgage payments. Complete the table to predict the principal for the first 3 years. (Round to the nearest hundredth, if applicable.

Answer 1

To calculate the principal for Jamie and Eddie's apartment loan over the first three years, we start with the initial principal amount of $320,000 and reduce it by 4.5% each year.

Year 1:

• Initial Principal: $320,000
• Decrease: \(320,000 \times 0.045 = 14,400\)
• New Principal: \(320,000 - 14,400 = 305,600\)

Year 2:

• Initial Principal: $305,600
• Decrease: \(305,600 \times 0.045 = 13,752\)
• New Principal: \(305,600 - 13,752 = 291,848\)

Year 3:

• Initial Principal: $291,848
• Decrease: \(291,848 \times 0.045 = 13,136.16\)
• New Principal: \(291,848 - 13,136.16 = 278,711.84\)

Now we can summarize the results in a table:

| Year | Principal | |------|-------------| | 0 | $320,000.00 | | 1 | $305,600.00 | | 2 | $291,848.00 | | 3 | $278,711.84 |

Thus, the principal balances at the end of each year are:

• End of Year 1: $305,600.00
• End of Year 2: $291,848.00
• End of Year 3: $278,711.84

If you want the values rounded to the nearest hundredth:

• Year 1: $305,600.00
• Year 2: $291,848.00
• Year 3: $278,711.84