You\'ve decided to buy a house that is valued at $1 million. You rave $150,000 t

Question

You've decided to buy a house that is valued at $1 million. You rave $150,000 to use as a down payment on the house, and you take out a mortgage for the nest. Your bank has approved your mortgage for the balance amount of $850,000 and is offering you a standard 30-year mortgage with 12% fixed nominal interest rate (called the annual percentage rate, or APR). According to this proposal, what will be your monthly mortgage payment? $8,743.21 $13,551.98 $10,929.01 $11,803.33 Your friends suggest that you take a 15-year mortgage, because a 30-year mortgage is too long, and you will lose a lot of money on interest. If your bank approves a 15-year, $850,000 loan at a fixed nominal interest rate of 12% (APR), what will be the difference in the monthly payment of the 15-year mortgage and 30-year mortgage? (Note: Round the final value of any interest rate used to four decimal places.) $2,406.06 $1,676.95 $2,114.42 $1,458.22 It is likely that you won't like the prospect of paying more money each month, but if you do take out a 15-year mortgage, you will make far fewer payments and will pay a lot less In Interest. How much more total interest will you pay over the life of the loan if you take out a 30-year mortgage instead of a 15-year mortgage? $1,678,461.70

Explanation / Answer

1)pmt(rate,nper,pv,fv,type)

For 30 year loan
=PMT(12%/12,30*12,850000,,0)=$8743.21
option A

2)
pmt(rate,nper,pv,fv,type)
rate=12%/12=1%
nper=15*12

3)use cumipmt formuale ine xcel for each 30 year and 15 year mortage and difference of it and it gives extra interest paid

=CUMIPMT(12%/12,15*12,850000,1,15*12,0)=$986,257.14

=CUMIPMT(12%/12,30*12,850000,1,30*12,0)=2,297,554.55

Difference=1,311,297.41

pv=850,000
=PMT(12%/12,15*12,850000,,0)=$10,201.43

option D
1)

Related Questions

Navigate

• Browse (All)
• Browse Y
• Subjects

---

---

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