Question

Daphne bought a house for 335,000. She financed 276,475 of the purchase price with a 30 year, fixed rate mortgage with 5.65% interest rate. What is the total cost of the principal and interest after 30 years

Answer 1

First find the yearly payment using the formula of the present value of annuity ordinary
The formula is
Pv=pmt [(1-(1+r)^(-n))÷r]
Pv present value 276475
Pmt yearly payment ?
R interest rate 0.0565
N time 30 years

Now solve for pmt
The formula change to be
Pmt=pv÷ [(1-(1+r)^(-n))÷r]
Plug in the equation above
Pmt=276,475÷((1−(1+0.0565)^(−30))÷(0.0565))=19,339.22

Now find the cost of the principle and interest after 30 years by multiplying the yearly payment by the time

19,339.22×30=580,176.60...answer

Hope it helps:-)