question archive How much will you pay on a 25 year, $400,000 mortgage if you make monthly payment at the beginning of month? Interest is 3
How much will you pay on a 25 year, $400,000 mortgage if you make monthly payment at the beginning of month? Interest is 3
Subject:AccountingPrice:2.87 Bought7
How much will you pay on a 25 year, $400,000 mortgage if you make monthly payment at the beginning of month? Interest is 3.5% compounded annually
Multiple Choice
$1.985
$1991
$1,973
$1968
$1979
Purchase A New Answer
Custom new solution created by our subject matter experts
GET A QUOTE
Answer Preview
Answer:
Interest rate per month = ( 1 + 0.035 )1/12 - 1 = 0.00287 = 0.287%
Now Amount Financed = $400,000
Total Payments in 25 Years = 25 * 12 = 300
Now as payment in the beginning of the month
$400,000 = X * [ 1 + PVAF ( 0.287% , n - 1 )
$400,000 = X * [ 1 + PVAF ( 0.287% , 299 ) ]
$400,000 = X * [ 1 + 200.5312 ]
X = $400,000 / 201.5312
X = $1,985
Therefore Correct Answer is (a)
