Business, 20.02.2020 17:40 sun64

You’ve decided to buy a house that is valued at $1 million. You have $200,000 to use as a down payment on the house, and want to take out a mortgage for the remainder of the purchase price. Your bank has approved your $800,000 mortgage, and is offering a standard 30-year mortgage at a 9% fixed nominal interest rate (called the loan’s annual percentage rate or APR). Under this loan proposal, your mortgage payment will be per month.

Your friends suggest that you take a 15-year mortgage, because a 30-year mortgage is too long and you will pay a lot of money on interest. If your bank approves a 15-year, $800,000 loan at a fixed nominal interest rate of 9% (APR), then the difference in the monthly payment of the 15-year mortgage and 30-year mortgage will be:

It is likely that you won't like the prospect of paying more money each month, but if you do take out a 15-year mortgage, you will make far fewer payments and will pay a lot less in interest. How much more total interest will you pay over the life of the loan if you take out a 30-year mortgage instead of a 15-year mortgage?

a. $1,010,987.89
b. $856,769.40
c. $1,182,341.77
d. $1,096,664.83

Answers: 2

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Answers

Answer from: montgomerykarloxc24x

1. First blank: $6,436.982. Second blank: $1,677.153. Option b. $856,769.40

Explanation:

The equation to calculate the monthly payments of a loan is:

$Payment = L\times \frac{i}{1-(1 + i)^{-n}}$

Where,

L is the amount of the loan. i is the interest rate per period and is calculated dividing the yearly percent rate by 100 and by the number of periods in a year = 0.09/12 = 0.0075 n is the total number of periods and is calculated as the product of the number of periods in a year times the number of years (different for each of the options given)

Quesiton 1. Mortgage payment for a stardard 30-year mortgage.

n = 30

$Payment = L\times \frac{i}{1-(1 + i)^{-n}}\\\\Payment = \$ 800,00\times \frac{0.0075}{1-(1 + 0.0075)^{-(30\times 12)}}\\\\Payment=\$ 6436.98$

$6,436.98 ← answer

Question 2. Difference in the monthly payment

$Payment = L\times \frac{i}{1-(1 + i)^{-n}}\\\\Payment = \$ 800,00\times \frac{0.0075}{1-(1 + 0.0075)^{-(15\times 12)}}\\\\Payment=\$ 8114.13$

Difference in the monthly payment of the 15-year mortgage and 30-year mortgage will be $8,114.13 - $6,436.98 = $1,677.15 ← answer

Question 3. How much more interest will you pay over the life of the loan if you take out a 30-year mortage instead of a 15-year mortgage?

i. Interest over the life of the 30-years mortgage

Interest = Total payment - loan amountTotal payment = $6436.9 × 30 × 12 = $2,317,312.80Interest = $2,317,312.80 - $800,000.00 = $1,517,312.80

ii) Interest over the life of the 15-years mortgage

Total payment = $8,114.13 × 15 × 12 = $1,460,543.40Interest = $1,460,543.40 - $800,000,.00 = $660,543.40

iii) Difference = $1,517,312.80 - $660,543.40 = $856,769.40

That is the option b. $856,769.40 ← answer

Answer from: Quest

the answer is b. the events might happen and are based on crimes.

Answer from: Quest

rational decision making is a multi-step process for making choices between alternatives. the process of rational decision making favors logic, objectivity, and analysis over subjectivity and insight. the word “rational” in this context does not mean sane or clear-headed as it does in the colloquial sense.

hope this

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