Solve the problem. If necessary, refer to the table below.
-In order to purchase a home, a family borrows $65,000 at an annual interest rate of 11%, to be paid back over a 30-year period in equal monthly payments. How much interest will they pay over the
30-year period? Round to the nearest dollar.

Question

Solve the problem. If necessary, refer to the table below. 
-In order to purchase a home, a family borrows $65,000 at an annual interest rate of 11%, to be paid back over a 30-year period in equal monthly payments. How much interest will they pay over the
30-year period? Round to the nearest dollar.

Quizplus · Accepted Answer

The total interest paid over the 30-year period can be calculated using the formula for the monthly payment on a fixed-rate mortgage, which is derived from the annuity formula. The monthly interest rate is 11% per year, or 0.11/12 per month. The number of payments over 30 years is 30*12. The monthly payment can be calculated and then multiplied by the total number of payments (360) to find the total amount paid over the life of the loan. Subtracting the original loan amount ($65,000) from this total gives the total interest paid. The correct calculation leads to a total interest amount closest to $157,844.

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