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Finance mathematics problem

  1. Oct 29, 2012 #1
    1. The problem statement, all variables and given/known data
    James bought a house worth $308,000.00 and financed 85% of that amount. He has a 30-year loan at 4.82%. How much will he owe on the house after 12 years?

    Then find the equity that James has from Item #4 above. His equity is the difference between the new value of the house which has increased by 1.5% compounded annually for the 12 years, and the amount that he still owes after 12 years.


    2. Relevant equations

    payment into a sinking fund R=S*i/((1+i)^n -1)

    Future Value P=R*(1-(1+i)^-n)/i

    Present value P=R*(1-(1+i)^-n)/i

    3. The attempt at a solution

    308,000.00 * 85/100 = 261,800.00

    r = 4.82% / 12 = 0.00402 --> the monthly payment

    I think i am suppose to plug the values into one formula first then another.

    A=R*((1+i)^n -1)/i
    261.800((1+.0482/12)^360-1)/.0482

    Not sure if that is even correct....

    Anyone know how to solve this?
     
  2. jcsd
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