Some banks now have biweekly mortgages (that is, with payments every other week)

Question

Some banks now have biweekly mortgages (that is, with payments every other week). Compare a 20-year, $140,000 loan at 9.3% by finding the payment size and the total interest paid over the life of the loan under each of the following conditions. (Round your answers to the nearest cent.) (a) Payments are monthly, and the rate is 9.3%, compounded monthly. payment size $ total interest S (b) Payments are biweekly, and the rate is 9.3%, compounded biweekly. (Assume a standard 52-week year.) payment size $ total Interest S Need Help L DILMaster Read It

Explanation / Answer

a.

b.

Period payment = [P x R x (1+R)^N]/[(1+R)^N-1] a Principle P 140000 b Rate of interest per period R 0.775% [9.3%/12] c Number of payments N 240 20*12 d Period payment using the formula[Payment size] 1,286.75 e=d*c Total payments 308,820.92 f=e-a Interest 168,820.92

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