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(Solved): Harriet Marcus is concerned about the financing of a home. She saw a small cottage that sells for ...
Harriet Marcus is concerned about the financing of a home. She saw a small cottage that sells for \( \$ 50,000 \). Assuming that she puts \( 20 \% \) down, what will be her monthly payment and the total cost of interest over the cost of the loan for each assumption? (Use the Table 15.1) Note: Do not round intermediate calculations. Round your answers to the nearest cent. e. What is the savings in interest cost between \( 3 \% \) and \( 4 \% \) ? Note: Round your answer to the nearest dollar amount. f. If Harriet uses 30 years instead of 25 for both \( 3 \% \) and \( 4 \% \), what is the difference in interest? Note: Use 360 days a year. Round your answer to the nearest dollar amount.
Expert Answer
Ans. Loan = 50000 Down Payment = 50000*20% = 10000 Actual Loan Amount (excluding interest) = 50000 - 10000 = 40000 (P) (r) = a) 3%/12 = 0.0025, b) 3.5%/12 = 0.0029, c) 3.75%/12 = 0.0031, d) 4%/12 = 0.0033. Number of Payments (N) = 25*12 = 300 Monthly