Question

Consider a 30-year mortgage for $374680 at an annual interest rate of 5.2%. After 12 years, the mortgage is refinanced to an annual interest rate of 3.4%. How much interest is paid on this mortgage? Round your answer to the nearest dollar.

Answer 1

Solution:

Rate for period(0.052/12)	0.00433333
Total No of Payments(30*12)	360
Present Value	$374,680
Future Value	0
Payment per period	$2057.41
=PMT(0.052/12,360,-374680,0,0)

Rate per period(0.052/12)	0.00433333
Total No of Payments(12*12)	144
Payment per Period	$2057.41
Present Value	$374,680
Future value	$288,201.21
(-FV(0.052/12,144,2057.41,-374680,0))

Principle paid(374680-288201.21)	$86,478.79
Interest paid(2057.41*144-86478.79)	$209,788.25

answered by: anonymous