Phil Pittman is interested in a fixed-rate mortgage for $200,000. He is undecided whether to choose a 15- or 30-year mortgage. The current mortgage rate is 4.5% for the 15-year mortgage and 5% for the 30-year mortgage. (Round your answers to the nearest dollar. Use this table, if necessary.) (a) What are the monthly principal and interest payments (in $) for each loan? 15-year mortgage $ 30-year mortgage $ (b) What is the total amount of interest (in $) paid on each loan? 15-year mortgage $ 30-year mortgage $ (c) Overall, how much more interest (in $) is paid by choosing the 30-year mortgage? 2$
Phil Pittman is interested in a fixed-rate mortgage for $200,000. He is undecided whether to choose a 15- or 30-year mortgage. The current mortgage rate is 4.5% for the 15-year mortgage and 5% for the 30-year mortgage. (Round your answers to the nearest dollar. Use this table, if necessary.) (a) What are the monthly principal and interest payments (in $) for each loan? 15-year mortgage $ 30-year mortgage $ (b) What is the total amount of interest (in $) paid on each loan? 15-year mortgage $ 30-year mortgage $ (c) Overall, how much more interest (in $) is paid by choosing the 30-year mortgage? 2$
Chapter5: The Time Value Of Money
Section: Chapter Questions
Problem 41P
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Transcribed Image Text:Table 14-1: Monthly Payments to Amortize Principal and Interest per $1,000 Financed
Monthly Payments
(Necessary to amortize a loan of $1,000)
Interest
5
10
15
20
25
30
35
40
Rate (%)
Years
Years
Years
Years
Years
Years
Years
Years
3.50
18.19
9.89
7.15
5.80
5.01
4.49
4.13
3.87
3.75
18.30
10.01
7.27
5.93
5.14
4.63
4.28
4.03
4.00
18.42
10.12
7.40
6.06
5.28
4.77
4.43
4.18
4.25
18.53
10.24
7.52
6.19
5.42
4.92
4.58
4.34
4.50
18.64
10.36
7.65
6.33
5.56
5.07
4.73
4.50
4.75
18.76
10.48
7.78
6.46
5.70
5.22
4.89
4.66
5.00
18.87
10.61
7.91
6.60
5.85
5.37
5.05
4.82
5.25
18.99
10.73
8.04
6.74
5.99
5.52
5.21
4.99
5.50
19.10
10.85
8.17
6.88
6.14
5.68
5.37
5.16
5.75
19.22
10.98
8.30
7.02
6.29
5.84
5.54
5.33
6.00
19.33
11.10
8.44
7.16
6.44
6.00
5.70
5.50
6.25
19.45
11.23
8.57
7.31
6.60
6.16
5.87
5.68
6.50
19.57
11.35
8.71
7.46
6.75
6.32
6.04
5.85
6.75
19.68
11.48
8.85
7.6
6.91
6.49
6.21
6.03
7.00
19.80
11.61
8.99
7.75
7.07
6.65
6.39
6.21
7.25
19.92
11.74
9.13
7.90
7.23
6.82
6.56
6.40
7.50
20.04
11.87
9.27
8.06
7.39
6.99
6.74
6.58
7.75
20.16
12.00
9.41
8.21
7.55
7.16
6.92
6.77
8.00
20.28
12.13
9.56
8.36
7.72
7.34
7.10
6.95
8.25
20.40
12.27
9.70
8.52
7.88
7.51
7.28
7.14
8.50
20.52
12.40
9.85
8.68
8.05
7.69
7.47
7.33
8.75
20.64
12.53
9.99
8.84
8.22
7.87
7.65
7.52
9.00
20.76
12.67
10.14
9.00
8.39
8.05
7.84
7.71
9.25
20.88
12.80
10.29
9.16
8.56
8.23
8.03
7.91
9.50
21.00
12.94
10.44
9.32
8.74
8.41
8.22
8.10
9.75
21.12
13.08
10.59
9.49
8.91
8.59
8.41
8.30
10.00
21.25
13.22
10.75
9.65
9.09
8.78
8.60
8.49
10.25
21.37
13.35
10.90
9.82
9.26
8.96
8.79
8.69
10.50
21.49
13.49
11.05
9.98
9.44
9.15
8.98
8.89
10.75
21.62
13.63
11.21
10.15
9.62
9.33
9.18
9.08
11.00
21.74
13.78
11.37
10.32
9.80
9.52
9.37
9.28
11.25
21.87
13.92
11.52
10.49
9.98
9.71
9.56
9.48
11.50
21.99
14.06
11.68
10.66
10.16
9.90
9.76
9.68
11.75
22.12
14.20
11.84
10.84
10.35
10.09
9.96
9.88
12.00
22.24
14.35
12.00
11.01
10.53
10.29
10.16
10.08
12.25
22.37
14.49
12.16
11.19
10.72
10.48
10.35
10.29
12.50
22.50
14.64
12.33
11.36
10.9
10.67
10.55
10.49
12.75
22.63
14.78
12.49
11.54
11.09
10.87
10.75
10.69
13.00
22.75
14.93
12.65
11.72
11.28
11.06
10.95
10.90
Transcribed Image Text:Phil Pittman is interested in a fixed-rate mortgage for $200,000. He is undecided whether to choose a 15- or 30-year mortgage.
The current mortgage rate is 4.5% for the 15-year mortgage and 5% for the 30-year mortgage. (Round your answers to the
nearest dollar. Use this table, if necessary.)
(a) What are the monthly principal and interest payments (in $) for each loan?
15-year mortgage
$
30-year mortgage
$
(b) What is the total amount of interest (in $) paid on each loan?
15-year mortgage
$
30-year mortgage
$
(c) Overall, how much more interest (in $) is paid by choosing the 30-year mortgage?
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