Question: HOME MORTGAGES Suppose a home buyer secures a bank loan of A dollars to purchase a house. If the interest rate charged is r/year and the loan is to be amortized in t yr, then the principal repayment at the end of i mo is given by
B = f(A, r, t, i) = A[(1 + (r/12)i) - 1]/[(1 + (r/12)12t) - 1] (0 ≤ i ≤ 12t)
Suppose the Blakelys borrow a sum of $280,000 from a bank to help finance the purchase of a house and the bank charges interest at a rate of 6%/year. If the Blakelys agree to repay the loan in equal installments over 30 yr, how much will they owe the bank after the 60th payment (5 yr)? The 240th payment (20 yr)?