Question

Richard Miyashiro purchased a condominium and obtained a 30-year loan of $198,000 at an annual interest rate of 8.15%. (Round your answers to the nearest cent.)

(a) What is the mortgage payment? $1473.61

(b) What is the total of the payments over the life of the loan? $

(c) Find the amount of interest paid on the mortgage loan over the 30 years. $

Answer 1

(a)	Mortgage payment		$       1,473.61
	Working:
	Present value of annuity of 1	=	(1-(1+i)^-n)/i		Where,
		=	134.3637891		i	=	8.15%/12	=	0.006792
					n	=	30*12	=	360
	Mortgage payment	=	Loan amount	/	Present value of annuity of 1
		=	$       1,98,000	/	134.3638
		=	$       1,473.61
(b)	Total payments		$ 5,30,500.07
Working;
	Total payments	=	Monthly payment	*	Number of months
		=	$       1,473.61	*	360
		=	$ 5,30,500.07
(c)	Total amount of interest paid		$ 3,32,500.07
Working;
	Total repayment of loan		$ 5,30,500.07
	Less loan amount		$ 1,98,000.00
	Total Interest paid		$ 3,32,500.07