(b) What is the total amount of interest EACH loan? Show your work. (c) Overall, how much more interest is choosing the 30-year mortgage? Show

Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
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Problem: Justin and Hayley are interested in a
fixed-rate mortgage for $450,000. They are
undecided whether to choose a 15- or 30-year
mortgage. The current mortgage rate is 3.5% for
the 15-year mortgage, and 3.85% for the 30-year
mortgage.
(a) What are the monthly principal and interest
payments for EACH loan? Show your work.
(b) What is the total amount of interest paid on
EACH loan? Show your work.
(c) Overall, how much more interest is paid by
choosing the 30-year mortgage? Show your
work.
Transcribed Image Text:Problem: Justin and Hayley are interested in a fixed-rate mortgage for $450,000. They are undecided whether to choose a 15- or 30-year mortgage. The current mortgage rate is 3.5% for the 15-year mortgage, and 3.85% for the 30-year mortgage. (a) What are the monthly principal and interest payments for EACH loan? Show your work. (b) What is the total amount of interest paid on EACH loan? Show your work. (c) Overall, how much more interest is paid by choosing the 30-year mortgage? Show your work.
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