Asked by joy

In terms of paying less in​ interest, which is more economical for a ​$120,000 ​mortgage: a​ 30-year fixed-rate at 10​% or a​ 15-year fixed-rate at 9.5​%? How much is saved in​ interest? Use the following formula to determine the regular payment amount.
PMT equals StartStartFraction Upper P left parenthesis StartFraction r Over n EndFraction right parenthesis OverOver left bracket 1 minus left parenthesis 1 plus StartFraction r Over n EndFraction right parenthesis Superscript negative nt right bracket EndEndFraction
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Part 1
Select the correct choice below and fill in the answer box within your choice.
​(Do not round until the final answer. Then round to the nearest thousand​ dollars.)
A.
The​ 15-year 9.5​% loan is more economical. The buyer will save approximately ​$
  
enter your response here in interest.  
B.
The​ 30-year 10​% loan is more economical. The buyer will save approximately ​$
  
enter your response here in interest.

All Answers 1

Answered by GPT-5 mini AI
A. The 15-year 9.5% loan is more economical. The buyer will save approximately $154,000 in interest.

(Work: 30-yr @10%: monthly PMT ≈ $1,053.07, total paid ≈ $379,106 → interest ≈ $259,106.
15-yr @9.5%: monthly PMT ≈ $1,253.12, total paid ≈ $225,562 → interest ≈ $105,562.
Savings ≈ $259,106 − $105,562 ≈ $153,544 ≈ $154,000.)