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Bus Math Week 9.2

business math week 9.2.

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almiravidad21
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9 views

Bus Math Week 9.2

business math week 9.2.

Uploaded by

almiravidad21
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PPTX, PDF, TXT or read online on Scribd
You are on page 1/ 18

DOWNPAYMENT

AND MORTGAGE
LOAN
OBJECTIVES:
AT THE END OF THE LESSON,
LEARNERS MUST BE ABLE TO
 Comprehend what a mortgage is
and understand that having a
long-term asset like land and
building can be a source of cash;
 Compute for the downpayment on
a mortgage and the amount of the
mortgage loan;
 Determine how payment is applied
to interest and principal and
determine the balance of the loan
after each payment;
 Prepare an amortization table;
 Solve problems involving
mortgages
A mortgage is probably the biggest loan one can have. A
mortgage is usually obtained for a house, a house and lot,
or for a machinery or equipment.

Today, the Internet has what is called a “mortgage


amortization calculator” that helps would-be home-
owners.
MORTGAGE LOAN
It is when you use your property as collateral for a
loan from a financial institution.

DOWNPAYMENT
It is usually a certain percent of the purchase price of
the property. This is generally called the buyer’s equity.
DOWNPAYMENT COMPUTATION:

Assume that you wish to purchase a second-hand


machine worth P500,000 and the seller requires you a
25% downpayment.

Downpayment = Purchase price x downpayment %

Mortgage loan = Purchase price – downpayment


Term of the Loan:
Total Number of
Payments

The installment payment


on the loan is
amortization. The
schedule prepared
showing the installment
payments for the period
of payment (called the
term of the loan) is called
amortization table.
MONTHLY PAYMENT
If there were no interest rate, determining your monthly rate
would be simple: Divide the loan amount by the number of payments.

However, the bank has to make money so the bank will collect
interest. Assume that the bank will charge you a 5^% annually, the
5% is what is called the annual percentage rate or APR.

Since you are to make monthly payments, we have to convert


the 5% APR into a monthly rate. We divide 5% by 12 to get 0.41667%
which is equal to .0041667.
To determine the monthly payment, we use the
formula:

A =
i x P x (1 + I )n
(1 + i)n - 1

Where = A is the monthly payment


P is the loan’s initial
amount/principal
i is the monthly interest rate
n is the total number of payments
SOLUTION:

A = (0.0041667) (P375,000) x (1 + .004167)360


(1 + .004167) 360- 1
= 1 562.51(4.468)
4.468-1
= 6,981.31
3.468
= P2,013.06
Amortization Table
Even though the monthly payment is fixed, the
amount of money paid to interest and principal varies
each month.

For the first payment, to determine what portion of


the P2,013.06 goes to interest, we multiply the principal
balance of P375,000 by the monthly interest of
0.0041667 to get P1,562.51.
Therefore, deducting P1,562.51 from P2,013.06
payment will result to P450.55 only. Deducting P450.55
from P375,000, the new balance of the mortgage will
now be P374,549.45.
PERFORMANCE TASK
1.Using excel, the group will prepare an amortization
schedule with the following data.

Group 1
Purchase price - ₱750,000.00
Downpayment % - 18%
Interest rate - 5.5%
Loan Term - 15 years
Payable monthly
1.Using excel, the group will prepare an amortization
schedule with the following data.

Group 2
Purchase price - ₱820,000.00
Downpayment % - 17%
Interest rate - 4.5%
Loan Term - 10 years
Payable monthly
1.Using excel, the group will prepare an amortization
schedule with the following data.

Group 3
Purchase price - ₱620,000.00
Downpayment % - 10%
Interest rate - 6.5%
Loan Term - 15 years
Payable monthly
1.Using excel, the group will prepare an amortization
schedule with the following data.

Group 4
Purchase price - ₱1,000,000.00
Downpayment % - 20%
Interest rate - 2.5%
Loan Term - 10 years
Payable monthly
Requirements:

Size - A4 size bondpaper


Font - Bookman Old Style
Font Size - 12
Margin - Normal
White folder

Soft copy must also be sent.

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