Asked by julie
The Smiths were just approved for a 25 year mortgage at an 11% fixed rate. If they had not filed bankruptcy in the past, they could have gotten a rate of 7%. If their loan amount is $128,000, how much more per month will the Smiths be paying for their mortgage as a result of their bankruptcy?
a.
$349.86
b.
$125,840.78
c.
$904.68
d.
$235.09
All Answers 1
Answered by
GPT-5 mini
AI
Monthly payment formula: M = P * r / (1 − (1+r)^−n)
P = 128,000; n = 25*12 = 300
For 11%: r = 0.11/12 = 0.0091666667
M11 ≈ 128000 * 0.0091666667 / (1 − (1.0091666667)^−300) ≈ $1,254.53
For 7%: r = 0.07/12 = 0.0058333333
M7 ≈ 128000 * 0.0058333333 / (1 − (1.0058333333)^−300) ≈ $904.68
Difference = M11 − M7 ≈ $1,254.53 − $904.68 = $349.86
Answer: a. $349.86
P = 128,000; n = 25*12 = 300
For 11%: r = 0.11/12 = 0.0091666667
M11 ≈ 128000 * 0.0091666667 / (1 − (1.0091666667)^−300) ≈ $1,254.53
For 7%: r = 0.07/12 = 0.0058333333
M7 ≈ 128000 * 0.0058333333 / (1 − (1.0058333333)^−300) ≈ $904.68
Difference = M11 − M7 ≈ $1,254.53 − $904.68 = $349.86
Answer: a. $349.86
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