P = L[c(1 + c)n]/[(1 + c)n - 1]
Where:
P is monthly payment
L is 30,000 - 5% of 30,000 = ______
n = 20 yrs x 12 months/yr = ______
c = 10%/12 = 0.10/12 = _____
Once you've found the monthly payments, the interest you paid is:
P*n - L
Use a similar process to get the monthly payments and interest for the 30 year option, adjusting n accordingly.
The price of a small cabin is $30,000. The bank requires a 5% down payment. The buyer is offered two mortgage options: 20-year fixed at 10% or 30-year fixed at 10%. Calculate the amount of interest paid for each option. How much does the buyer save in interest with the 20-year option?
Find the monthly payment for the 20-year option.
1 answer
1 answer