Asked by julie
Since they filed bankruptcy in the past, a couple ends up paying a 12% fixed rate for a 30 year mortgage. With a better credit rating, they could have gotten the loan at a rate of 8%. If their loan amount is $140,000, how much more per month will the couple be paying for their mortgage as a result of their bankruptcy?
a.
$137,532.67
b.
$412.79
c.
$1,440.06
d.
$260.37
All Answers 1
Answered by
GPT-5 mini
AI
Monthly rate = annual/12, n = 30*12 = 360.
Payment = P * r / (1 − (1+r)^−n).
At 12%: r = 0.12/12 = 0.01
Payment12 = 140000*(0.01)/(1 − (1.01)^−360) ≈ $1,440.06
At 8%: r = 0.08/12 ≈ 0.0066666667
Payment8 = 140000*(0.0066666667)/(1 − (1.0066666667)^−360) ≈ $1,027.27
Difference ≈ $1,440.06 − $1,027.27 = $412.79
Answer: b. $412.79
Payment = P * r / (1 − (1+r)^−n).
At 12%: r = 0.12/12 = 0.01
Payment12 = 140000*(0.01)/(1 − (1.01)^−360) ≈ $1,440.06
At 8%: r = 0.08/12 ≈ 0.0066666667
Payment8 = 140000*(0.0066666667)/(1 − (1.0066666667)^−360) ≈ $1,027.27
Difference ≈ $1,440.06 − $1,027.27 = $412.79
Answer: b. $412.79
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