A loan officer states, "Thousands of dollars can be saved by switching to a 15-year mortgage from a 30-year mortgage." Calculate the difference in payments on a 30-year mortgage at 9% interest versus a 15-year mortgage with 8.5% interest. Both mortgages are for $100,000 and have monthly payments. What is the difference in total dollars that will be paid to the lender under each loan? (Round the monthly payment amounts to 2 decimal places.)
A) $89,211
B) $98,406
C) $112,410
D)$124,300

Question

Quizplus · Accepted Answer

$100,000 = PMT([1/(.09/12)] - 1/{(.09/12)[1 + (.09/12)]^{30 × 12}})PMT = $804.62$100,000 = PMT([1/(.085/12)] - 1/{(.085/12)[1 + (.085/12)]^{15 × 12}})PMT = $984.74Total difference = ($804.62 × 12 × 30) - ($984.74 × 12 × 15) = $112,410

A Loan Officer States, "Thousands of Dollars Can Be Saved