Question 10You borrow $165,000 to buy a house. The mortgage rate is 7.

QUESTION

Question 10You borrow $165,000 to buy a house. The mortgage rate is 7.5 percent and the loan period is 30 years. Payments are made monthly. If you pay the mortgage according to the loan agreement, how much total interest will you pay?Answera. $229,079b. $206,408c. $264,319d. $250,332
Monthly payments are $165,000 = Payment(1-1/1.000625^360)/0.00625 Payment =$1,153.70 Yearly payments are $165,000 =Payment(1-1/1.075^30)/0.075 Payment =$13,970.75 Here we can calculate the inteerst on yealy base. Year Beginning Total payment Inerest paid PrincipalPais Ending balance 1 165000 $13,970.75 12375 $1,595.75 $163,404.25 2 $163,404.25 $13,970.75 $12,255.32 $1,715.44 $161,688.81 3 $161,688.81 $13,970.75 $12,126.66 $1,844.09 $159,844.72 4 $159,844.72 $13,970.75 $11,988.35 $1,982.40 $157,862.32 5 $157,862.32 $13,970.75 $11,839.67 $2,131.08 $155,731.24 6 $155,731.24 $13,970.75 $11,679.84 $2,290.91 $153,440.33 7 $153,440.33 $13,970.75 $11,508.02 $2,462.73 $150,977.60 8 $150,977.60 $13,970.75 $11,323.32 $2,647.43 $148,330.17 9 $148,330.17 $13,970.75 $11,124.76 $2,845.99 $145,484.18 10 $145,484.18 $13,970.75 $10,911.31 $3,059.44 $142,424.74 11 $142,424.74 $13,970.75 $10,681.86 $3,288.90 $139,135.84 12 $139,135.84 $13,970.75 $10,435.19 $3,535.57 $135,600.27 13 $135,600.27 $13,970.75 $10,170.02 $3,800.73 $131,799.54 14 $131,799.54 $13,970.75 $9,884.97 $4,085.79 $127,713.75 15 $127,713.75 $13,970.75 $9,578.53 $4,392.22 $123,321.53 16 $123,321.53 $13,970.75 $9,249.11 $4,721.64 $118,599.89 17 $118,599.89 $13,970.75 $8,894.99 $5,075.76 $113,524.13 18 $113,524.13 $13,970.75 $8,514.31 $5,456.44

$108,067.69 19 $108,067.69 $13,970.75 $8,105.08 $5,865.68 $102,202.01 20 $102,202.01 $13,970.75 $7,665.15 $6,305.60 $95,896.41 21 $95,898.41 $13,970.75 $7,192.38 $6,778.37 $89,120.04 22 $89,120.04 $13,970.75 $6,684.00 $7,286.75 $81,833.29 23 $81,833.29 $13,970.75 $6,137.50 $7,833.26 $74,000.03 24 $74,000.03 $13,970.75 $5,550.00 $8,420.75 $65,579.28 25 $65,579.28 $13,970.75 $4,918.45 $9,052.31 $56,526.97 26 $56,526.97 $13,970.75 $4,239.52 $9,731.23 $46,795.74 27 $46,795.74 $13,970.75 $3,509.68 $10,461.07 $36,334.67 28 $36,334.67 $13,970.75 $2,725.10 $11,245.65 $25,089.02 29 $25,089.02 $13,970.75 $1,881.68 $12,089.08 $12,999.94 30 $12,999.94 $13,970.75 $975.00 $12,995.76 $4.18 $254,124.78 Total interest paid is $254,124.78 Which approximatly is equal to option D. (Note: Here i did not consider the frastion values thats why it is slight differnt from the answer)

ANSWER:

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