Question

CNBC.com reported mortgage applications increased 9.9% due to a decrease in the rate on 30-year fixed rate mortgages to 4.03%. Dennis Natali wants to purchase a vacation home for $300,000 with 20% down. Calculate his monthly payment for a 22-year mortgage at 7.5%. Calculate total interest. (Use Table 15.1.) (Do not round intermediate calculations. Round your final answers to the nearest cent.)

Answer 1

ANSWER

monthly payment formula= P*r*(1+r)^n / [(1+r)^n-1]

here,

P = 300,000 *(1-0.20 down) =>240,000.

r =7.5% per annum => 7.5*1/12=>0.625%=>0.00625

n=22 years * 12

=>264.

=>240,000*0.00625*(1.00625)^264/ [(1.00625)^264-1]

=>1,500 *5.180311212/[5.180311212-1]

=>7,770.46681928/ 4.180311212

=>$1,858.8249.

total interest paid = (monthly payment *number of payments) - loan amount

=> (1,858.8249*264) - 240,000

=>490,729.7736-240,000

=>$250,729.7736.

monthly payment	1,858.8249
total interest	250,729.7736

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