Question

Robert borrows $235,000 to purchase a home at an interest rate of 6% and a term of 30 years.

a) What is the monthly payment on this mortgage?

b) Considering the first month’s payment, how much of the payment is interest?

c) At the end of the 30 year term, what is the total amount of interest paid?

Answer #1

Ans a) $ 1408.94

b) $ 1175.00

c) $ 272219.74

P = | Regular Payments | |||

PV = | Loan Amount | |||

r = | rate of interest | |||

n = | no of periods | |||

P = | r (PV) | |||

1 - (1 + r )^-n | ||||

P = | (6%/12)*235000 | |||

1 - (1 / (1 + 6%/12)^360)) | ||||

P = | 1175 | |||

0.833958072 | ||||

P = | 1408.94 | |||

Beginning Balance | Interest | Principal | Ending Balance | |

1 | 235000 | 1175.00 | 233.94 | 233591.06 |

Total Interest = | Total Amount paid - Loan | |||

(1408.94* 360) - 235000 | ||||

272219.74 |

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