Contemporary Mathematics for Business & Consumers 8th Edition by Robert Brechner,Geroge Bergeman

Exercise 4

Luis Schambach is shopping for a 15-year mortgage for $150,000. Currently, the Fortune Bank is offering an 8.5% mortgage with 4 discount points and the Northern Trust Bank is offering an 8.75% mortgage with no points. Luis is unsure which mortgage is a better deal and has asked you to help him decide. (Remember, each discount point is equal to 1% of the amount financed.)
a. What is the total interest paid on each loan
b. Taking into account the closing points, which bank is offering a better deal and by how much