Mr. Smith is purchasing a $190000 house. The down payment is 20% of the price of the house.

Question

He is given the choice of:

(A) a 20-year mortgage at a rate of 6%.
Find:
(i) The monthly payment: $
(ii) The total amount of interest paid: $

Answer 1

P = (Po*r*t)/(1-(1+r)^-t).

r = (6%/12) / 100% = 0.005 = Monthly %
rate expressed as a decimal.

t = 12mo/yr * 20yrs = 240 Months.

Po = 0.8 * 190,00 = $152,000.

P=(152000*0.005*240) / (1-(1.005)^-240
= 182400 / 0.69790 = $261,354.05

Monthly(I+P) = 261,354.05/240 = $1088.98.

Int. = P - Po = 261,354.05 - 152,000 =
$109,354.05.