Jim buys a house and takes out a mortgage of $150,000 at j₂ = 6%,to be repaid over 20 years with weekly payments of R.What is the value of R?

Question

Quizplus · Accepted Answer

To calculate the weekly payments, we need to first calculate the total number of weeks in 20 years:

20 years = 20 x 52 weeks = 1040 weeks

Next, we can use the formula for calculating the mortgage payment:

M = P [ i(1 + i)^n ] / [ (1 + i)^n – 1]

where:
M = mortgage payment
P = principal (the amount borrowed)
i = interest rate per period (in this case, per week)
n = total number of periods (in this case, weeks)

Plugging in the values given in the question, we get:

M = 150,000 [ 0.06/52 (1 + 0.06/52)^1040 ] / [ (1 + 0.06/52)^1040 – 1 ] 
M ≈ $246.06

Therefore, the value of R is approximately $246.06, which is answer choice B.

Jim Buys a House and Takes Out a Mortgage of $150,000