Question

Compare two loans:Loan 1: $175,000; 8% annual (monthly payments); 30 years.Loan 2: $175,000; 7% annual (monthly payments); 15 years.If you pay an additional $250 per month in additional principle on Loan 1 ONLY, which loan pays off sooner

Answer 1

Answer:

Following are the responses to the given question:

Explanation:

For the First loan payment period is value:

$\to NPER(\frac{8\%}{12},-250-PMT(\frac{8\%}{12},12\times 30,-175000),175000)=215\ months$

For the second loan payment period is value:

$\to 15\times 12=180 \ months$

that's why the loan will be paid off soon.