Question

jamie and eddie are buying an apartment for $320,000.00. thier 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.

Answer 1

Multiply the principal by 0.955 each year (100% − 4.5% = 95.5% = 0.955).

- Year 0 (start): $320,000.00
- Year 1: 320,000 × 0.955 = $305,600.00
- Year 2: 305,600 × 0.955 = $291,848.00
- Year 3: 291,848 × 0.955 = $278,714.84