Question

Paul lands a home mortgage of $58,00 at a 7.40% interest rate. He plans to pay this after 3 years. What will the total principles + interest payment be?

Answer 1

Answer:

The answer to the question is

The total principles + interest payment is $64,854.00

Step-by-step explanation:

To solve the question, we not that

Home mortgage value = $58000

Interest rate, r = 7.4 % annually = 7.4/12 % monthly or 0.62 % monthly

Duration of payment  = 3 years = 3 × 12 =36 months

Monthly payment is given by

$M = P\frac{r(1+r)^n}{(1+r)^n-1}$ = $58000\frac{0.00062(1.00062)^{36}}{(1.00062)^{36}-1}$  = $1,801.5

Cumulative interest payed is given by

M×n - P = 1801.5 × 36 - P =$6, 854

Total principles + interest payment = M × n = $64,854.00