bill and laura borrowed $15 000 at 6 per annum compounded monthly for 30 years to purchase a home. Their monthly payment is determined to be $899.63.

Question

Find a recursive formula for their balance after each monthly payment has been made.
Determine Bill and Laura's balance after the first payment.

Answer 1

r = (6%/12)/100% = 0.005 = Monthly % rate expressed as a decimal.

I = 0.005 * 150000 = $750.00 = Int. for
1st month.

---Payments---Interest.-Prin.--Bal.
1. $899.33----750.00---149.33-149850.67

2. $899.33----749.25---150.08-149700.59

3. $899.33----748.50---150.83-149549.77

NOTE: The int. is always 0.005 times the
unpaid Bal.

Answer 2

Nice job