Mr. smith is purchasing a $ 1 house. the down payment is 20 % of the price of the house. he is given the choice of two mortgages:
a) a 30-year mortgage at a rate of 7 %.
find: (i) the monthly payment: $ (ii) the total amount of interest paid: $
b) a 15-year mortgage at a rate of 7 %.
find: (i) the monthly payment: $ (ii) the total amount of interest paid: $

The price of the house = $ 100000

The down payment is 20 % of 100000 means dollars

So, loan amount will be = dollars

Case A:

30-year mortgage at a rate of 7 %

p = 80000

r =

n =

EMI formula is :

Putting the values in formula we get;

=

Monthly payment = $532.22

So, total amount paid in 30 years will be =

Interest paid will be = dollars

Case B:

15-year mortgage at a rate of 7 %.

Here everything will be same as above. Only n will change.

n =

Putting the values in formula we get;

=

Monthly payment = $719.04

Total amount paid in 15 years will be =

Interest paid will be = dollars