The price of a small cabin is ?$55 comma 00055,000. The bank requires a? 5% down payment....

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Finance

The price of a small cabin is
?$55 comma 00055,000.
The bank requires a? 5% down payment. The buyer is offered twomortgage? options: 20-year fixed at
9.59.5?%
or? 30-year fixed at
9.59.5?%.
Calculate the amount of interest paid for each option. How muchdoes the buyer save in interest with the? 20-year option?

Answer & Explanation Solved by verified expert

4.2 Ratings (540 Votes)

Step 1 Price of the small cabin 55000 Down payment 5 of Price of the small cabin 5 55000 2750 Therefore loan amount Price of the small cabin Down payment 55000 22750 52250 The buyer is offered two mortgage options 20year fixed at 95 We can use Present value PV of an Annuity See Answer

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The price of a small cabin is?$55 comma 00055,000.The bank requires a? 5% down payment. The buyer is offered twomortgage? options: 20-year fixed at9.59.5?%or? 30-year fixed at9.59.5?%.Calculate the amount of interest paid for each option. How muchdoes the buyer save in interest with the? 20-year option?