You plan to pay 10% as a down payment and take

out a 30-year loan for the rest.

Part a, how much is the loan amount going to be?

Because you are putting 10% down, the loan amount

is going to be 90% of $222,000 since 100% minus 10% is 90%.

So for part a we have to find 90% of 222,000.

To find the percent of a number, we convert

the percent to a decimal and multiply.

90% as a decimal is 0.90, or just 0.9,

giving us 0.9 times 222,000.

And now going to the calculator

0.9 times 222,000 is 199,800 and therefore

the loan amount is $199,800.

And then for part b, what will your monthly

payments be if the interest is 6%?

To answer this question we will use the TI-84 TVM solver.

Let's begin by determining the required

information below where capital N is the total

number of payment periods.

Because you are paying monthly for a period

of 30 years, capital N is 30 times 12, which is 360.

There are 360 months in 30 years.

I% for part b is 6% and therefore we enter six here.

PV stands of present value, which is a beginning

loan amount, which we now know is 199,800.

This is positive because you are receiving

that amount of money.

PMT stands for payment amount, which we are solving for.

FV stands for future value, which is zero

because after 30 years the loan is paid off

and the balance is zero.

And payments per year and compounds per year

will both be 12 because you are paying monthly

and we assume the interest is compounded monthly.

And we always leave the PMT option at the bottom set on end.

And now we go to the calculator

and then we press apps, enter, enter,

then enter the information.

Capital N is 360, enter.

I% is six, enter.

PV is 199,800, this is the present value, enter.

We are solving for the payment, so we'll come

back to this row, enter.

Future value is zero, enter.

And payments per year and compounds per year are both 12.

And notice how we do have PMT set on end.

To solve for the monthly payment we go up

to the row for PMT or payment and press alpha, enter.

Notice how it's negative because this

is the amount you have to pay each month

which means the monthly payment when the interest

rate is 6% is $1,197.90 to the nearest cent.

So using the solver, even though the PMT

amount is negative, we do enter a positive value

for part b for the monthly payments.

And then for part c, what will your monthly

payments be if the interest rate is 7%?

To answer this question using the TVM solver

we simply change the 6% to 7% and then solve for PMT again.

So going back to the calculator, again we change

the six to a seven for the interest rate.

Everything else stays the same.

And now we go down and solve for the payment again.

So go down to the payment row, the cursor does

have to be in this row to solve for this,

and then we press alpha, enter.

So if the interest rate changes to 7%

then the monthly payments are going to be $1,329.27.

Looking at the monthly payments, notice how

when the interest rate goes up from 6% to 7%

the monthly payment goes up by over $130

which is why the interest rate of a mortgage

is so important.

I hope you found this helpful.