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Scilla [17]
3 years ago
14

Abby and jason are building a new house. they obtained a construction loan of $100,000, which will be rolled over into a convent

ional 30-year mortgage when the house is completed in 16 months. simple interest of 2% per month will be charged on the construction loan. the 30-year mortgage will carry a 12% interest rate with monthly payments. (what is the monthly payment that abby and jason will make?) if they make each payment as scheduled for the life of the 30-year mortgage, how much total interest will they pay on the house (including the construction loan interest)?
Business
1 answer:
ivann1987 [24]3 years ago
3 0

Answer:

the initial principal balance is $100,000, but it will gain 2% simple monthly interest during 16 months = $100,000 + ($100,000 x 2% x 16) = $132,000

the mortgage loan's principal = $132,000

APR = 12%

n = 30 years or 360 monthly payments

1) using a loan calculator we can determine that the monthly mortgage payment (only  principal + interest) = $1,357.77

2) since they will make 360 monthly payments, they will pay in total = $1,357.77 x 360 = $488,796.71

in total they will pay $$356,796.71  in interest

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In this example, Sally used the principle of accrual for the things in June that she later paid in July... but her expenses were origined in June, so they apply to June.

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