Chapter 14, Problem 16AT

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8th Edition

Robert Brechner + 1 other

ISBN: 9781305585447

Textbook Problem

How much more total interest will be paid on a 30-year fixed-rate mortgage for $100,000 at 9.25% compared with a 15-year mortgage at 8.5%?

To determine

**To calculate:** The difference in the total interest to be paid on

Explanation

**Given Information:**

Amount financed is

**Formula used:**

The formula for the number of

Use the table 14.1 to calculate the table factor. Locate the table factor on the intersection of the number of years column and the interest rate row.

The formula for Monthly payment is

And,

Total interest is given by,

Now,

**Calculation:**

Consider the provided values,

As,

To calculate number of

Use the table 14.1 for locating the table factor at the intersection of 30 years (column) and 9.25

So, the table factor for 30 years at 9.25

As,

To calculate Monthly Payment, use above formula:

As,

Use above formula to calculate the number of payments:

Then,

Now consider,

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