Please answe and explain 13 thru 18 Principle &Interest; Problems Problem Set 2:

Question

Please answe and explain 13 thru 18 Principle &Interest; Problems Problem Set 2: Use a Mortgage amount of $200,000 to answer questions 13 and 14. 13) How much in principle and how much in interest would be paid on a 796, 30 year mortgage? P, 14) How much in principle and how much interest would be paid on a 7%, 15 year mortgage? eneral questions: Comparing a 30 year mortgage to a 15 year mortgage (Base on answers from questions 5 and 6) 15) What is the major advantage of the 30 year mortgage over the 15 year mortgage? 16) What is the major advantage of the15 year mortgage over the 30 year mortgage? (mortgage)17-18) Which customer mortgage (30 year or 15 year) would benefit the contractor most and why? reason)

Explanation / Answer

Installment can be found using following formula

13) Installment = Loan amount/PVIFA(7%,30 years)

=200,000/12.40904

=16117.28$

Thus total payment to be made = 16117.28*30 = 483518.4$

Thus total interest paid = 4,83,518.4-2,00,000 = 2,83,518.4$

Toal principal paid = 200,000$

14)

Installment = Loan amount/PVIFA(7%,15 years)

=200,000/9.1079

=21958.92$

Thus total payment to be made = 21958.92*15 = 329383.9$

Thus total interest paid = 3,29,383.9-2,00,000 = 1,29,383.9$

Toal principal paid = 200,000$

15) Benefit of 30 year mortagage is that the installment amount is less than 15 year mortagage loan

16) Benefit of 15 year is that total interest outlay is less than 30 year mortagage loan

17) From view point of contractor, 30 year mortagage loan would be beneficial

18) 30 year mortagage loan would be beneficial, because of higher interest income to the contractor

Related Questions

Navigate

• Browse (All)
• Browse P
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.