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.)

Question

Year | Principle
0 | $320,000.00
1 | ?
2 | ?
3 | ?

Answer 1

To calculate the principal for each year based on a 4.5% decrease, you can use the formula:

$$\text{New Principal}=\text{Current Principal}\times (1-\text{Decrease Rate})$$

Where the decrease rate is 4.5% or 0.045. Let's proceed with the calculations.

For Year 1: $$\text{Principal for Year 1}=320,000\times (1-0.045)=320,000\times 0.955=305,600.00$$

For Year 2: $$\text{Principal for Year 2}=305,600\times (1-0.045)=305,600\times 0.955=291,696.00$$

For Year 3: $$\text{Principal for Year 3}=291,696\times (1-0.045)=291,696\times 0.955=278,158.32$$

Now, let's put this in table form:

| Year | Principal | |------|-----------------| | 0 | $320,000.00 | | 1 | $305,600.00 | | 2 | $291,696.00 | | 3 | $278,158.32 |

Remember to round as needed. For Year 3, if rounding to the nearest hundredth, it remains $278,158.32.