Question

Vanessa bought a house for $268,500. she has a 30 year mortgage with a fixed rate of 6.25%. vanessa’s monthly payments are $1,595.85. how much was vanessa’s down payment?

Answer 1

Based on the calculation below, the amount of vanessa’s down payment is $9,314.45.

Calculation of down payment

First, we have to calculate the balance after deducting vanessa’s down payment using the formula for calculating the present value (PV) of an ordinary annuity as follows:

PV = P * ((1 - (1 / (1 + r))^n) / r) …………………………………. (1)

Where;

PV = Present value or balance after deducting vanessa’s down payment = ?

P = Monthly payment = $1,595.85

r = Monthly interest rate = 6.25% / 12 = 0.0625 / 12 = 0.00520833333333333

n = number of months = 30 * 12 = 360

Substitute the values into equation (1), we have:

PV = $1,595.85 * ((1 - (1 / (1 + 0.00520833333333333))^360) / 0.00520833333333333) = $259,185.55

Now, the amount of vanessa’s down payment can be calculated as follows:

Vanessa’s down payment = Cost of the house – PV = $268,500 - $259,185.55 = $9,314.45

Learn more about the present value of an ordinary annuity here: https://brainly.com/question/17112302.

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