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Ashna

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A couple decides to buy a house which is currently valued at $318,921.46 on loan. The couple is willing to start paying $200.00 per month and are willing to increase their payment at a rate of 5% every month. How many payments are necessary to pay off the loan amount assuming no deposit was made (answer to the nearest whole number)? What is the value of the final payment that they would make assuming no deposit was made (answer to the nearest whole number)?
 
Ashna said:
A couple decides to buy a house which is currently valued at $318,921.46 on loan. The couple is willing to start paying $200.00 per month and are willing to increase their payment at a rate of 5% every month. How many payments are necessary to pay off the loan amount assuming no deposit was made (answer to the nearest whole number)? What is the value of the final payment that they would make assuming no deposit was made (answer to the nearest whole number)?
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Please show us what you have tried and exactly where you are stuck.

Please follow the rules of posting in this forum, as enunciated at:

https://www.freemathhelp.com/forum/threads/read-before-posting.109846/#post-486520

Please share your work/thoughts about this assignment.
 
I know the answer is 97 for part A and 9839 for part B but i cant get that answer using the geometric formula
 
a) 200*(0.05^(n-1))=318921.46
318921.46/200=0.05^(n-1)
ln1594.6073=n-1ln0.05
n=-1.461629446

b) since my above answer is in correct so my answer below is also incorrect

200((1-0.05^-1.461629446)/(1-0.05))
-16.57481368
 
I have difficulty in setting up a geometric equation can you help?
 
Ashna said:
I have difficulty in setting up a geometric equation can you help?
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Get a value a -> 200, the starting cost.
You know that you're increasing it at 5% each year, meaning you're multiplying it by 1.05^n with n being the number of years.
R is therefore 1.05 which is the common ratio (rather than 0.05 which you seem to have used earlier), the website stated by above should help
 
Ashna said:
yes first term is 200
common ratio is 0.05
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Double check the ratio. We want to increase a number by 5%. It means we should multiply it by what? Multiplying by 0.05 doesn't exactly increase.
 
Ashna said:
equation:
318921.46=200*(1.05^(n-1))
Is the above correct?
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No. You are using the formula for the Nth term. You need to use the formula for the sum of a geometric sequence from the linked website.
 
lev888 said:
No. You are using the formula for the Nth term. You need to use the formula for the sum of a geometric sequence from the linked website.
Click to expand...
so the equation should be:
318921.46=200(1-1.05^n)/(1-1.05)
 
Ashna said:
what about the second part of the question where we have to calculate the final payment, which equation should i use there?
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If you found the number of payments you can use the formula for the Nth term.
 
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