Question

Calculate the total interest paid on a 30-year, 3.9% fixed-rate $200,000 mortgage loan.

Answer 1

Answer:

139,600.96

Step-by-step explanation:

We use the payment of a loan formula:

$\displaystyle PMT = \frac{P \left(\displaystyle \frac{r}{n}\right)}{\left[ 1 - \left( 1 + \displaystyle \frac{r}{n}\right)^{-nt} \right]}$

P is the principal: $200,000. t is the number of years: 30, n is 12 since it is compounded monthly. And r is 0.039 which is 3.9% in decimal form (3.9/100)

So the formula becomes:  

$\displaystyle PMT = \frac{200000 \left(\displaystyle \frac{0.039}{12}\right)}{\left[ 1 - \left( 1 + \displaystyle \frac{0.039}{12}\right)^{-12(30)} \right]}$

And using our calculator we get: PMT = $943.336

Then the total amount of money paid in the mortgage is:  

PMT*n*t = $943.336(12)(30) = $339,600.96

Therefore, the interest paid is:  

$339,600.96 - $200,000 = $139,600.96

You have to enter it without $ and rounded to the nearest cent so: 139,600.96